For the fifth consecutive year, Deloitte net positive in new audit engagements while the rest of its Big Four peers saw net decreases in clients, according to the latest annual study.
In Audit Analytics’ 2019 summary of audit client gains and losses as reported in Securities and Exchange Commission filings, Deloitte, with a net gain of 26, continued its run of dominance among the Big Four. The firm saw a net gain of 13 large accelerated filers, its third year leading the category, and it also set the pace with a net gain of seven accelerated filers.
Deloitte led all audit firms included in the study with 37 new client engagements, its second straight year reaching that total. In 2018, Deloitte was second in net gain to Marcum, which had added 52 clients.
None of Deloitte’s additions resulted from mergers and acquisitions. Fifteen client gains came from other Big Four firms, with seven from PwC and EY apiece, and 12 came from global and national firms. Deloitte ranked second to EY in net audit fees won at $40.4 million and market capitalization audited at $23.6 billion and came in fourth for new assets audited at $37.9 billion.
The other Big Four firms all experienced net losses in SEC clients in 2019 for the fifth straight year, according to the study. The last time any of them other than Deloitte net positive was KPMG in 2014 (plus-15).
In 2019, PwC experienced the highest net loss of 21 engagements, gaining nine clients but losing 30. Of these losses, nine were large accelerated filers, seven were accelerated filers, and 11 were non-accelerated filers and smaller reporting companies. The firm lost 17 SEC audit clients to its Big Four peers—including nine to EY—and seven to global and national firms.
PwC was in the top five firms for net audit fees won in 2019 at $19.5 million and for market capitalization audited at $16.7 billion. It also achieved top ranking at $153.2 billion in new assets audited, including $79.2 billion from Hartford Mutual Funds and $50.8 billion from Short-Term Investments Trust.
KPMG had a net loss of 15 engagements, gaining nine clients but losing 24. Those losses included eight large accelerated filers. The firm lost 12 clients to other Big Four firms, eight of those to EY, and seven to global and national firms, with BDO picking up four. On the plus side, KPMG ranked second in new assets audited at $93.2 billion, adding $89.9 billion from Protective Life Corp., and it finished fifth overall in market capitalization audited at $6.7 billion.
Consistent with last year, EY’s net change was the steadiest of the Big Four at only seven fewer SEC clients. This change consisted of a gain of 23 engagements and a loss of 30. The loss included 13 large accelerated filers and 11 accelerated filers. EY’s net change was primarily driven by a net loss of 11 to global and national competitors, spread across five firms.
EY was at the top of the list for net audit fees won at $46.2 million, including $13 million from Hertz. It was also the leader in new market cap audited of $38.6 billion and in third place for new assets audited of $57.4 billion.
At the next level of firms in the study—global and national—Marcum was the leader with 35 new SEC client engagements in 2019, finishing second among all audit firms to Deloitte. Marcum finished first in its group in last year’s survey, driven by a merger with another firm in 2018.
Of Marcum’s new client gains in 2019, 25 came from regional and local firms, six from global and national firms, and four from the Big Four. Overall, however, Marcum experienced no net change in SEC clients, as it also lost 35 clients in 2019 to other firms.
BDO added 26 new clients but lost 32, for a net loss of six. Grant Thornton had a net gain of three thanks to 16 additions—nine from the Big Four and five from other global and national firms.
In the third category of firms—regional and local—Prager Metis finished third in new SEC audit engagements among all firms in the study with 28. The firm added 25 clients through two mergers in 2019.
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