E&Y and PwC Split as Top Fortune Auditors
Ernst & Young has the largest audit client list among Fortune 500 companies, according to the latest analysis by ANR and AuditAnalytics.com
E&Y holds the most clients, 142.
But the answer to the question of which Big Four firm is the leading Fortune 500 audit firm is not so simple. What else is new with accounting.
PwC holds the largest share of revenue audited, according to ANR’s analysis of 495 companies on the list. PwC a clear No. 1 in share of revenue audited, with a 32% share. The firm finished a close second in the analysis in audit clients with 139. (See methodology note, below.)
Clients included in ANR’s 2012 analysis range from Exxon Mobil/Irving, Texas (Revenue: $452.9 billion), audited by PwC, to Molina Healthcare/Long Beach, Calif. (Revenue: $4.8 billion) audited by E&Y.
Ernst & Young audits 142 of the 495 companies included in the analysis, good for a 28.7% overall client share. The firm holds down the No. 2 position in revenue audited with an overall share of 29.9% (See charts, page 15.) E&Y is the auditor for 17 of the Fortune 50 companies and 36 of the Fortune 100 companies. The firm’s largest audit client in the analysis is Wal-Mart Stores/Bentonville, Ark. (Revenue: $447 billion)
PwC’s dominant share of assets audited can be traced to the fact the firm counts 17 of the Fortune 50 companies and 36 of the Fortune 100 companies as audit clients. Don’t forget the firm handles the audit for the largest company on the Fortune list, Exxon Mobil.
Deloitte placed third in both share of clients audited and share of revenue audited, 21.6% and 21.2% respectively. KPMG finished fourth in share of clients audited and share of revenue audited, 20.2% and 16.3% respectively.
Auditing the Fortune 500 companies is not handled entirely by the Big Four. BDO and Grant Thornton also have a share of the pie.
BDO audits four clients in the analysis. Grant Thornton is the auditor for three companies in the analysis.
Methodology:
ANR removed five companies from the analysis because they did not fit the methodology. ANR’s methodology uses signed opinions, signed in the past year. The client share and revenue audited share calculations are based on data available for 495 companies. Not to belabor the point but the short explanation of using signed opinions is in our view simple: everyone is treated fairly that way. I had the information for two companies that were removed but is that really equitable? In the end it is not, IMO. It just isn't intelectually honest to base calculations on several methods of compiling data. If you worked off of signed opinions and data you could find what if you only had 498 companies? Is the data true, probably (well depending on the publication and how dumb and or lazy the editor is it may not be) Is it accurate? No. If you are using two different methods of compiling auditor information you need the entire universe filled out. If you aren't relying on filings how are you comiling auditor information? Is it by word of mouth from a company CFO or underling? Is it correct? What a nightmre!! The field shold be level for everyone, I know a strange concept, but that is the way we do it.
I go back to my newspaper days. If you were to write a story about a graduating high school class and say 1,000 kids were in the class as freshman and 795 kids graduated those area accurate figures. They do not make for an accurate graduation rate. Maybe a local factory close down and 500 families moved out of the area since the freshman class started, maybe there was......... fill in the blank. it could be any number of things but while true, it is not accurate (intellectually honest) to say less than 80% of the class graduated. Same principle here. The 495 companies included in the analysis all had their auditor information in 10-Ks. Everyone was treated the same..
This is an excerpt of the story that was published in the 17-page May 11, 2012 issue of Accounting News Report.
The published story had charts listing Fortune 500 companies and their auditors, charts depicting audited client share and revenue audited shares along with charts breaking down audit client rosters by Top 50 Metro Statistical Area.
For more information on Accounting News Report: contact Jonathan Hamilton 702-283-9985.