Ernst & Young and Deloitte each had net increases in new public company audit engagements in 2020, while their other two Big Four peers saw net decreases, according to the latest annual study.
In Audit Analytics’ 2020 summary of auditor changes as reported in Securities and Exchange Commission filings, EY (37) edged out Deloitte (26) to rank first among all audit firms in total new SEC engagements in 2020. EY and Deloitte also ranked first and second in net audit fees won at $57.1 million and $42.7 million, respectively.
EY’s net positive of 10 engagements led the way among the Big Four this year, with Deloitte close behind at six. Deloitte is the only Big Four firm to net positive in each of the last six years. PwC had 22 net losses, and KPMG recorded the worst figure by any Big Four firm since 2014 at minus-31.
EY, which recorded a net loss of seven engagements last year, experienced 23 client gains from other Big Four firms, including 12 from PwC and 10 from KPMG, and 10 from other global and national firms. EY had a net gain of five each in large accelerated filers and accelerated filers, a significant improvement from 2019 net losses in these categories (three and six, respectively).
Of Deloitte’s new audit clients,18 came from the Big Four, with seven each from PwC and KPMG, and six from other global and national firms. Despite six straight years of net gains, according to the study, Deloitte’s plus-6 is a steep drop from plus-26 in 2019. The firm had a net gain in 2020 of nine large accelerated filers, its fourth year leading this category, and two accelerated filers. These gains were offset by a net loss of six non-accelerated filers.
Though they each extended their streak of net losses, PwC and KPMG were both still included in the top five firms for net audit fees won in 2020 at $38.1 million and $16.7 million, respectively.
KPMG’s net loss of 31—the steepest by a Big Four firm since EY’s minus-43 in 2014—was the result of gaining 15 clients but losing 46, more than any other large firm in the study. The losses included 11 large accelerated filers, 16 accelerated filers, and 10 non-accelerated filers. Of the client losses, 27 were to other Big Four firms and 13 to other global and national firms.
PwC’s net loss of 22 consisted of 16 gains and 38 losses. The firm shed nine large accelerated filers, 13 accelerated filers, and seven non-accelerated filers. Of its losses, 22 went to other Big Four firms and nine to other global and national firms.
How second-tier firms fared
In the category of other global and national firms in the study, Grant Thornton led in gains in new SEC client engagements in 2020 with 20, finishing third among all the audit firms behind EY and Deloitte. Of these, 14 came from the Big Four. Grant Thornton’s net gain of 11 was a notable improvement from plus-3 in 2019. The firm had the highest number of net gains in accelerated filers at nine, and it finished fourth out of all firms in net audit fees won at $27.7 million.
Marcum’s net loss of 26 clients—second most in the study—was a significant drop from no net change recorded in 2019. The firm gained only 11 new clients, five each from the Big Four and regional and local firms, compared to 35 in 2019.
BDO also experienced greater net client losses in 2020 (minus-13) compared to 2019 (minus-6). It added 14 clients—six from the Big Four—but lost 27.
Among regional and local firms studied, Baker Tilly had the largest net increase in new SEC audit clients at 26. This included a net of three accelerated filers and 15 non-accelerated filers. Of its 33 new engagements for the year, 31 were from its merger with Squar Milner in November.
BF Borgers came in second with a net increase of 21 in new SEC engagements, of which 14 were non-accelerated filers.