Approximately 1,100 public companies changed their audit firms in 2014, a number approximately the same as in 2013, although one company managed to change its audit firm three times last year while another changed its audit firm for the first time since 1890.
The research firm Audit Analytics reported in a blog post Tuesday that PricewaterhouseCoopers held the longest tenure before its client, Unilever, changed auditors. In May 2014, the consumer goods giant hired KPMG to audit its 2014 financial statements, but before that it had used PwC (or one of its predecessors) as its auditing firm since 1890.
While several companies changed auditors twice last year, one Las Vegas technology company, Clone Algo, managed to change auditors thrice.
“In March 2014, De Joya Griffith resigned as the company’s auditor, and Seale & Beers were appointed,” said Audit Analytics. “In April, Seale & Beers resigned, and the company proceeded to hire Hartley Moore. Amazingly, Hartley Moore then resigned in June, citing scope limitations as the reason for their resignation. Both Seale & Beers and Hartley Moore resigned before giving an audit opinion. Finally, the company engaged Terry L Johnson in July, who issued an unqualified opinion for the fiscal 2014 financial statements. Considering the CPA’s recent troubles, Clone Algo will soon have to change auditors again.”
Last week, the SEC sanctioned Johnson for performing deficient and fraudulent audits and quarterly reviews for eight publicly traded companies, and issuing false and misleading audit opinions on the companies’ annual financial statements (see SEC Charges CPA with Fraud).
Audit Analytics also recently reported that 2014 saw 746 unique companies disclose a total of 831 financial restatements. It found that 600 of the restatements, or about 76 percent, were “revision” restatements that did not undermine reliance on a company’s previously filed financial statements. The biggest restatement of the past year came from the car rental company Hertz, which went back to at least 2011, and reduced cumulative net income by over $200 million.
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