Which Firm Was the Biggest Loser In the First Auditor Shuffle of 2021?

[Updated with corrected version of net audit fees won table from Audit Analytics.]

With the first quarter of 2021 already in the books, it’s time once again to look at the winners and losers among the top 12 global and national accounting firms that participated in the first round of auditor musical chairs for 2021.

According to Audit Analytics’ latest analysis, new engagements increased from 16 in Q4 2020 to 56 in Q1 2021; however, client departures also increased—from 41 in Q4 2020 to 68 in Q1 2021.

As Accounting Today first reported last week, Grant Thornton was the first quarter’s big winner, as the Purple Rose of Chicago picked up 14 new SEC audit clients and lost two, for a net gain of 12. Ten of those new clients came from Big 4 firms (three each from KPMG and PwC, and two each from Deloitte and EY).

Deloitte also had a pretty good Q1, picking up 12 new engagements and losing four clients, for a net gain of eight.

In addition, D-town led the top 12 audit firms in net audit fees won, by a pretty substantial margin, thanks in large part to getting that General Electric engagement from KPMG. Of Deloitte’s $77.3 million in net audit fees won in Q1, $61.6 million came from GE, according to Audit Analytics:

 

With the good comes the bad, and no one had a worse Q1 in terms of bleeding clients than Marcum, which lost 18 clients and gained three, for a net of -15. But Audit Analytics pointed out a reason why Marcum had a dismal first quarter of the year:

Withum and Marcum each saw a significant number of departures due to finalized acquisitions of SPAC clients in Q1; it is not uncommon for SPACs to change their auditor once an acquisition has been completed. This trend has continued into Q1 of 2021.

Those two firms have dominated the SPAC auditor market, accounting for 90.2% of all blank check IPOs from Jan. 1, 2019 to Sept. 30, 2020, with 156 companies raising more than $47.7 billion. During that period, Withum audited 89 SPACs and Marcum 68.

But KPMG can’t use the SPAC excuse as the reason why it lost 16 SEC clients and gained only five, for a net of -11, in Q1, which was the worst among the Big 4. PwC also lost more clients than it gained in Q1, with a net of -4.

Here’s a chart from Audit Analytics showing all the client gains and losses in Q4:

Auditor Changes Roundup: Q1 2021 [Audit Analytics]
Grant Thornton takes the lead in new SEC clients [Accounting Today]

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2 Comments

  1. GT seems to be the biggest winner here, why are they not listed in the top 5?

    1. Because they’re undercharging at the moment hoping for a big payoff later like it’s nobodies business.

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