One of these three firms led the fourth quarter in IPO audit clients.
There were 59 IPOs in the U.S. between Oct. 1 and Dec. 31, 2019, raising more than $8.7 billion, a decrease of over $800 million from the same period last year and a decrease of more than $4 billion from Q3, according to Audit Analytics.
Overall, there were 231 U.S. companies that went public last year, raising more than $63 billion in funds—the second-highest amount in terms of amount raised and IPO count in the past five years, which is kinda remarkable given the real slow start to 2019’s activity.
Not remarkable surprising is that Big 4 firms audited 27 IPOs (45.8% of the market) in the fourth quarter and 126 IPOs (54.5% of the market) for 2019, according to Audit Analytics. PwC audited the top IPO last year—Uber Technologies.
But it wasn’t Deloitte or EY or PwC that had the most audit engagements in Q4. Congrats, Marcum.
And Marcum had the second-most IPO clients in 2019.
So not only did Marcum outduel the Big 4 in IPO audit engagements in two of the four quarters of 2019, but the Big 4’s IPO market share was the lowest it has been in the past six years, with a high of about 76% in 2014.
Deloitte is being sued by Marin County in California, who is alleging fraud by misrepresenting its “skills and experience.” In other words, the County says that D used their ERP project as more or less a training ground for its newbie consultants. And no client likes it when you bring the blades of grass on site. They can’t even turn on their laptops without causing some sort of scene, amiright?
The County in April 2005 hired Deloitte to implement its SAP ERP system. However, the County alleged in the court document, “rather than providing the County with SAP and public sector exp d the County’s SAP project as a trial-and-error training ground to teach its consultants — many of them neophytes — about SAP for Public Sector software, all at the county’s expense.”
Plus! The County claims Deloitte promised their very best people. From the complaint: “Deloitte further represented that for the County’s SAP implementation, Deloitte had assembled a team of its ‘best resources’ who had ‘deep SAP and public sector knowledge.’ “
A Big 4 firm promising their best and brightest on the job in an RFP? There’s a shocker. “Best” being relative, as we all know but Marin County (obviously not familiar with a Big 4 sales pitch) must have been expecting a team to fly in from hyperspace that could slap this thing in lickity.
1. The court filing describes sales practices that are common through the consulting and systems integration industry.
For example, the complaint alleges that Deloitte committed to “dedicate our best resources and bring tailored implementation strategies to meet [Marin’s] long-term needs.” Many IT customers complain their system integrators do not follow through on such commitments and use inexperienced labor in attempts to reduce their own costs and increase profits.
We’d be so bold to say that this true of many Big 4 engagements, whatever the service line. Newbies have to get their teeth cut somewhere – why not on a public service job where money obviously grows on trees?
Deloitte isn’t impressed with this gnat of a lawsuit, claiming that they did exactly what they were supposed to do (not to mention to put up with the amateurs at MC that have zilch ERP experience) and the system was working just fine when they left:
As stated previously, we fulfilled each and every one of our obligations under the contract, as evidenced three years ago when all of our work was approved by the County officials responsible for the project. To be clear, the SAP (NYSE:SAP) software was working properly when we completed our work in November 2007. Not only is the complaint without merit, but we are filing our own claim against the County for breach of agreement and unpaid invoices. Although we are confident that we will prevail in court, it remains our belief that this dispute can and should be resolved in a more logical fashion that benefits the County and its taxpayers.
So Deloitte gets a little huffy basically saying, “Suck it, Marin County. MBAs love Deloitte. OH, and btw, you owe us some money,” but ultimately wants to keep things civilized for the sake of the taxpayers. Let’s hope it stays childish just for the sake of entertainment purposes. Taxpayers in California are f—ed anyway.
