Who Audits Smaller Public Companies – 2020

In 2019, there were 2,679 companies that filed as either a Non-Accelerated Filer, Smaller Reporting Company, or both. This population of companies comprised just under half – or 44.8% – of the 5,985 SEC-registered public companies.

In a recent post, we looked at who audits public companies. The analysis, which breaks auditor market share down by five filer statuses, paints a clear picture of the stark differences between the competitive audit landscapes:

  • Large Accelerated Filers
  • Accelerated Filers
  • Non-Accelerated Filers
  • Smaller Reporting Companies
  • Non-Accelerated Filers + Smaller Reporting Companies

Here, we’ll take a closer look at the audit competition among those companies filing as either a Non-Accelerated Filer, Smaller Reporting Company, or both.

Some background: With an intent “to promote capital formation and reduce compliance costs for smaller companies while maintaining appropriate investor protections,” the SEC has expanded the scope of Smaller Reporting Companies, allowing companies to identify as a Smaller Reporting Company, or both a Smaller Reporting Company and either an Accelerated or Non-Accelerated Filer. These new amendments increase the number of eligible Smaller Reporting Companies without changing the “Accelerated Filer” threshold, which requires an auditor’s attestation of management’s assessment of internal control over financial reporting.

The infographic below offers a visual representation of the audit firms competing for market share among Non-Accelerated Filers and/or Smaller Reporting Companies. Together, the top 20 firms audit 1,486 of 2,679 companies – or 55% – of all Non-Accelerated and/or Smaller Reporting Companies in 2019.

The remaining 45% is shared by 246 other auditors, 93 of which audit just one Non-Accelerated and/or Smaller Reporting Company. This is vastly different from the market share of Large Accelerated Filers, with 27 audit firms (other than the Big Four), providing audit services to only 4.6% of those registrants.

Emphasizing the difference even more, the Big Four collectively audit 19% of these companies – a significantly smaller piece of the pie in comparison to their nearly 90% of Large Accelerated Filers.

Looking at the auditor rankings for 2019, Deloitte and Marcum audit the largest share of this market, each claiming around 6%. Not far behind is EY with 5%. After that, these percentages steadily decline, though market share becomes increasingly condensed with competing firms. 

Stay tuned for our next market share analysis, where we’ll take a look at the auditor market share of those companies having dual-filer statuses.

For more information about Audit Analytics or this analysis, please contact us.

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