While their share in the public company audit market is relatively steady, Big 4 firms are doing fewer public company audits as the number of public companies continues to decline.
EY audits 921 publicly listed entities or 15 percent of all U.S. registrants, more than any other audit firm, according to a 2018 analysis by Audit Analytics. The next three Big 4 firms are clustered closely together in second through fourth places. PwC audits 658 entities or 10.7 percent; Deloitte has 640 accounts, or 10.4 percent of entities; and KPMG has 631 engagements, or 10.2 percent.
Those numbers are lower in 2018 than they were in 2017 for all four firms, although market shares are similar. EY led last year with 947 engagements followed by PwC at 696, KPMG at 665, and Deloitte at 642. Deloitte leap frogged KPMG in the ranking from 2017 to 2018, but only by a narrow margin.
Audit Analytics says the population of publicly listed entities declined by 293 entities, or 4.5 percent, from 2017 to 2018, with the decline happening primarily among the smallest entities. Capital markets lost 179 smaller reporting companies, 66 non-accelerated filers, and 64 accelerated filers. Among large accelerated filers, however, the population grew by 14 companies.
Behind the Big 4, BDO accounted for 258 engagements, or 4.2 percent, followed by Grant Thornton at 218, or 3.5 percent. Not unexpectedly, the Big 4 dominate the population of large accelerated filers, holding all but 9 percent of those engagements.
Jay Clayton, chairman of the Securities and Exchange Commission, has bemoaned the continued decline in the number of public companies, indicating capital formation to be an important objective during his tenure. The SEC has taken steps to make it easier for companies to pursue initial public offerings and has signaled it will get away from the “broken windows” approach to enforcement.
In Europe, market shares for public company audit engagements look much different than they do in the United States. Audit Analytics says PwC holds the lead with 30 percent of the 633 public company engagements on leading European exchanges, followed by KPMG at 25 percent, Deloitte at 22 percent, and EY at 21 percent. BDO and Grant Thornton hold only 1 percent each.