Q3’13 Big4 Auditor Change Summary

The third quarter is all wrapped up and we’ve compiled information on client wins and losses at the Big4 firms between July and September of this year.

Starting with the losses:

Auditor Number of engagements lost*
Ernst & Young LLP 10
Deloitte & Touche LLP 8
KPMG LLP 6
PricewaterhouseCoopers LLP 5

* includes instances where auditors were dismissed, as well as resignations.

Ernst & Young managed double digit losses, with half of them coming by way of resignation.  There are a number of reasons auditors resign.  Usually, it has something to do with an imbalance between audit risk and audit fees.  As the 8-K filings contain very few details, it’s hard to know if that’s the case here.  Of the remaining EY losses, 4 out of 5 ended up choosing Big4 rival PwC as their new auditor.

Deloitte lost eight clients, all via dismissal.  DT’s losses include semiconductor company PMC-Sierra and fashion designer Perry Ellis International.

KPMG lost six clients, also all by way of dismissal.  Note that three of the losses were CVR Partners, CVR Refining, and CVR Energy, all based in Texas. No doubt the three are related, but without further detail, they’re being counting separately.

PwC managed to lose the fewest clients this quarter.  Losses include discount retailer SteinMart and multi-level marketer USANA.

Now for the client gains:

Auditor Number of new engagements
Ernst & Young LLP 9
PricewaterhouseCoopers LLP 7
KPMG LLP 4
Deloitte & Touche LLP 3

Ernst & Young wins include PMC-Sierra and three other clients from rival Deloitte, as well as one from PwC.  The other four client wins came from smaller firms.

PwC’s had a good quarter, with 4 of their 7 client wins coming from rival EY.  New clients include Paychex, Leapfrog, and Transamerica.

KPMG, in turn, took two clients from PwC and two more from smaller firms.

Lastly, Deloitte grabbed three new clients, including Titan Machinery, Lending Club, and Century Casinos, all coming from smaller firms.

In terms of overall gains,  the Big4 firms aren’t just taking clients from each other.  This quarter, nearly half of the new clients come from smaller firms.

Looking at gross numbers, the EY client base proved the most volatile both the most wins and most losses.  From a net standpoint, PwC and EY each had a net gain in clients, while KPMG and Deloitte each had a net loss in the number of clients.

That wraps up the Q3’2013 summary.  Tune in again for our regular weekly updates right here on the Auditor Carousel.

They just keep going round and round and round…

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