Auditor Changes Abounded in '04

In 2004, some 1,600 companies told their independent accountants that their services would no longer be required, an eye-opening jump of 78 percent in auditor changes from the prior year, according to a study conducted by proxy researcher Glass Lewis & Co. The report found that the auditor switching hit the Big Four firms the hardest, with Ernst & Young posting a net client loss of 200, while the aggregate client exits for E&Y, PricewaterhouseCoopers, KPMG and Deloitte hit 400. Conversely, the national firms have picked up much of the client largesse emanating from the Big Four, with Chicago-based BDO Seidman adding 109 new audit clients last year. The Glass Lewis report said that audit clients who revealed why they switched audit firms said that the top reasons for changing accountants included Sarbanes-Oxley prohibitions and lower audit fees, among others. According to published reports, the 2,500-plus companies than changed auditors over the past two years represent more than 25 percent of the Securities and Exchange Commission issuers in the United States.