Accounting News Report, using data from Audit Analytics, puts out an Auditor Change Analysis every year and it usually finds its way into our inbox, however, because the analysis is a subscription-based publication (and a pricey one at that), reproducing the whole thing is usually not an option. This year we asked pretty please, and we got permission to show you a few of the charts from this year's edition. And lo and behold, who do we find at the top of the opining heap for 2011? Why, it's PwC's farm team, KPMG!
First, it's important to note that Audit Analytics is using publically available data for SEC registrants, so if you're a firm that is chasing dynamic, non-public clients for audit services, your efforts won't be reflected here. Just want to make sure we understand each other.
Now, then. This first chart shows change in ranking across various categories and, as you can see, the House of Klynveld led in 4 out of 5 categories.
The chart above makes a lot more sense when you couple it with this overall audit scoreboard:
The hard figures are interesting to go over and they can help you draw a number of conclusions (or wild-ass theories, depending on your perspective). For example, the increase in net gain of assets audited by KPMG is more or less equal the number of net loss of assets audited combined of Deloitte and PwC. Of course when you look at the net gain/loss in audit fees, KPMG's increase is far less than Deloitte and PwC's combined decrease. One might conclude that KPMG is doing more work for less money but if you then you might also conclude that the increase of +9 clients for KPMG and total -21 clients for Deloitte and P. Dubs basically makes it a wash.
Something else that is noticeable is the number of gained engagements by second-tier firms, BDO and Grant Thornton. They are a combined +32 compared to the -9 for the Big 4. Of course it's worth pointing out that if you divide the net audit fees by the net gain in engagements, the fees per client for KPMG and Ernst & Young are far, far higher (both well over a million dollars) than that of BDO and GT (not even close to $1 million).
Then if you look at Marcum's increase in the number of engagements and you probably could conclude that they're walking into those RFPs, and saying, "We'll audit you for practically nothing!"
Finally, a quick look at a chart that shows us who gained clients from whom (apologies for the tiny font).
So how did KPMG do it? They were +5 on Deloitte, +4 on PwC, and -2 on E&Y, and an additional +4 against the second-tier firms. That's a pretty impressive run. As for the other Big 4 firms: Deloitte was -12 against the other three, E&Y was +7, and PwC was -8. BDO was +7 against the Big 4 and GT was +6.
It's plausible that Deloitte and PwC are phoning in some of these audit engagements (or not even proposing on some) because they are more focused on their booming advisory and consulting businesses, especially when you consider their revenue results for fiscal 2011.
As for E&Y, well, they just seem pretty humdrum. Nothing to exciting one way or another. Of course, they've had about all the excitement with the pee parties and phantom lunch attendees.
What do you guys think of the results? Is KPMG on a tear or are PwC and Deloitte letting them have these? Discuss.
*All tables were reproduced with permission from Accounting News Report.
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The chart above makes a lot more sense when you couple it with this overall audit scoreboard:
The hard figures are interesting to go over and they can help you draw a number of conclusions (or wild-ass theories, depending on your perspective). For example, the increase in net gain of assets audited by KPMG is more or less equal the number of net loss of assets audited combined of Deloitte and PwC. Of course when you look at the net gain/loss in audit fees, KPMG's increase is far less than Deloitte and PwC's combined decrease. One might conclude that KPMG is doing more work for less money but if you then you might also conclude that the increase of +9 clients for KPMG and total -21 clients for Deloitte and P. Dubs basically makes it a wash.
