KPMG rode the wave of two quarterly wins to the overall top spot in ANR’s full year analysis of SEC auditor change data.
ANR’s quarterly auditor change analysis is based on data compiled by AuditAnalytics.com
That KPMG finished atop the full rankings isn’t a total shock as the firm placed first in ANR’s analysis in Q2 and Q4.
The firm is the only one to make a return trip to the quarterly winners circle in 2011.
The firm’s full year SEC success can be traced to the simplest of formulas win more than your rivals and lose less than they do in each of the five categories that
go into determining the audit rankings: net client engagement wins, net gain revenue audited, net gain assets audited, net gain market cap audited and net gain
audit fees. KPMG placed fourth in net gain engagements for the year.
As simple as it was, the firm’s victory was nothing short of dominant.
People may want to quibble about what the wins really show, but in the end the full year results speak for themselves: KPMG nearly pulled off a clean sweep finishing
first in four categories: net revenue audited, net assets audited, net market cap audited and net gain audit fees. The firm finished fourth in net gain engagements audited.
In the net gain market cap and assets audited categories, the firm was the only Big Four firm to finish the year with a gain. KPMG’s net gain revenue audited
and net gain audit fees were more than double the next closest firm.
The firm had the best net client gained success in 2011 in terms of wins of departing Big Four clients and losses to Big Four firms, winning 17 while losing 10 to its Big Four peers.
The firm ended the year with the distinction of suffering the fewest client departures to their Big Four rivals.
SLM Corp, (Revenue: $6.78 billion) and Dillard’s (Revenue: $6.25 billion), both departed
PwC, were the firm’s largest wins for the year. SLM (Assets: $205.3 billion) were the largest engagement in terms of assets audited to change hands in 2011.
The firm had the second-largest average revenue audited and assets audited figures in terms of its “won” engagements in 2011: Revenue $785.16 million, Assets: $763.84 million.
KPMG placed first in the large accelerated filer category and accelerated filer category.
Much of the muscle behind Marcum’s second place finish in the annual rankings can be traced to a deal it kicked 2011 off with when the firm closed the transaction with
Bernstein & Pinchuk to merge the firm’s China practices effective Jan. 1, 2011, and create Marcum Bernstein and Pinchuk.
Marcum topped the one category that overall rankings leader KPMG didn’t top, net gain engagements audited with 34. The firm had twice the net gain engagements
audited as the next closest firm, BDO USA.
In addition to its overall second place finish, Marcum finished at the top of the small reporting company category.
Cohen Fund Audit Services, an affiliate of Cohen & Co./Westlake, Ohio, topped the rankings in the non-accelerated filer category. The firm started September 2011 off “cutting the ribbon” on its new office in downtown
Milwaukee. (See ANR 27, Sept. 28, 2011.)
The “secret to BDO USA’s success” and its third place finish in the 2011 rankings is not hard to see if one scans the SEC audit win/loss map otherwise known as the
Where The Audit Gains & Losses Came From 2011 chart on page 6. (ANR 5 , Jan. 30)
BDO USA had the best success, among the Non-Big Four firms, in landing departing Big Four clients. The firm landed eight Big Four auditor switches. BDO USA earned the distinction of having the
best success, among the Non-Big Four firms, in net gains involving wins and losses. The firm landed eight Big Four auditor switches and lost only one engagement to the Big Four.
BDO was equal opportunity when it came to picking up departing clients from the three groups of auditors: Big Four, national and regional and local.
BDO enjoyed net client gain success within its own peer group, landing four departing clients and losing none to its peers.
It is a good assumption that some of BDO’s SEC success can be traced to a M&A deal. The firm did do a deal brining Carneiro, Chumney & Co./San Antonio, Texas (See ANR 32, Nov. 6.) into the fold in November, the firm did not gain any wins through accounting firm M&A. BDO holds the distinction as being the only non-Big Four national firm in ANR’s fourth quarter analysis to land a departing Big Four client in Q4. (See ANR 2, Jan. 13.)
Grant Thornton finished the year in fourth place.
The firm also had success in landing departing Big Four clients posting a net gain of six, gaining eight departing Big Four engagements while losing only two to the profession’s largest firms.
GT also had success outside of landing departing Big Four engagements somewhat bolstered by the firm’s December deal with CCR/Westborough, Mass. (See ANR 36, Dec. 5, 2011.)
The deal accounted for eight of GT’s 13 wins from firms in the regional and local firm category.
Crowe rounded out the top five finishing with a solid net gain in engagements audited of nine. Crowe was another firm that had its SEC practice received a direct and immediate benefit from an M&A transaction gaining 12
wins in the fourth quarter as a result of its November deal in California with Perry-Smith. (See ANR 29, Oct. 15, 2011.)
It is worth noting that while both Deloitte and PwC finished in the “red” in terms of net clients gained for the year, both firms resigned better than 20% of their losses for the year.
PwC walked away from 23.8% of its losses, while Deloitte resigned from 21.7% of its departures. Additionally M&A had an impact on the Big Four departure landscape with a total of 9.7% of the Big Four switches that engaged another
Big Four firm in 2011 being “forced” by a client’s acquisition.
Deloitte was the most heavily impacted losing four clients to their client’s M&A. E&Y lost three because of an acquisition, PwC two and KPMG one.
This is an excerpt of the story was published in the January 30, 2012 issue of Accounting News Report.
Published story contained won /loss charts, overall auditor change scorecards and scorecards by SEC registrants.
For more information on Accounting News Report: contact Jonathan Hamilton 702-283-9985.