The Big Four accounting firms are collectively engaged in 55.5% of all French engagements, down 1.5 percentage points from the previous year. EY led the way with 16% of all engagements, followed by Deloitte with 15%. Mid-tier firm Mazars was third with 13% of all engagements, while PwC and KPMG round out the top five with 12% each.
France is unique because of its joint audit requirement that all public interest entities (PIEs) – which include publicly listed entities – must engage at least two independent accounting firms to perform an annual audit. Many cite this requirement as the reason France has a more diverse and competitive audit market than other countries.
The Big 4 continue to have a dominant role among the largest companies. Combined, the Big 4 audit 80% of CAC 40 engagements, led by EY with 26% of all engagements. Meanwhile, Mazars audits another 17% of CAC 40 engagements. The only other audit firm in the CAC 40 is Grant Thornton with two engagements.
CAC MID 60
Deloitte led with 19% of all engagements among the CAC Mid 60. In total, the Big 4 are engaged in 65% of all CAC Mid 60 engagements. Mazars is number three among the top 5 firms in this index, with 17% of the market. Twelve firms share the remaining 18% of CAC Mid 60 engagements, led by Grant Thornton with 6%.
The CAC Small index is much more diverse, with the Big 4 plus Mazars combining for just over half (51%) of all engagements. Sixty-four firms share the other 49% of engagements. Grant Thornton leads among smaller firms with 9% of CAC Small engagement.
Joint Audit Market Composition
One advantage of joint audits – which had been discussed, in a modified version, as a possible audit reform in the UK – is the ability to engage a larger firm with greater resources to conduct a quality audit and a smaller firm with fewer resources as the joint firm. In theory, this would create a more diverse market and allow smaller firms to learn from larger firms while still ensuring quality audits.
However, in France, which is the largest market in which we have a proxy for this theory, we see limited support. Among the CAC 40, less than half of joint audit engagements include a Big 4 firm and a non-Big 4 firm. As we saw above, France’s largest mid-tier firm Mazars audits most of the non-Big 4 engagements.
Among the CAC Next 20, the index is split. Half of the index engages two Big 4 firms, while the other half engages one Big 4 and one non-Big 4 firm. Among the half that engage both a Big 4 firm and a non-Big 4 firm, Mazars and Grant Thornton are the only two non-Big 4 firms engaged.
Among the CAC Mid 60, nearly 58% of companies engage a Big 4 firm and a non-Big 4 firm. Meanwhile, 5% engage multiple non-Big 4 firms. Nearly half of these non-Big 4 firm engagements also include the mid-tier firm Mazars.
Among the CAC Small, 91% engage at least one non-Big 4 firm. Additionally, over a quarter of CAC Small companies engage multiple non-Big 4 firms. This may be an indication that joint audits promote the use of smaller firms amongst small and mid-sized companies.
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