Dallas (Sept. 9, 2004) -- When corporate America goes shopping for auditors, they're increasingly looking beyond the Big Four toward smaller, less expensive firms, according to data on auditor changes.

With the Big Four focusing much of their attention of the Fortune 1000, many clients are turning to the so-called Group B firms, such as BDO Seidman and Grant Thornton, the Dallas Morning News reported this week.

Last year, 510 Big Four clients switched auditors. While some companies just hired another Big Four firm, about 280 of those clients, or 55 percent, hired a firm outside the Big Four, the Morning News reported, citing data from AuditAnalytics.com.

The article cites as reasons for the trend: higher audit fees; the Big Four’s greater reluctance to audit financially risky companies; and their greater ability to be more discriminating in their choice of clientele because they have more work than they can do.

So far this year, 279 clients have switched auditors, and 165 of them, about 60 percent, went to smaller firms, DMN reported. Compare that to 2000, when only 39 percent of the audit switches were to smaller firms.

-- WebCPA staff

Register or login for access to this item and much more

All Accounting Today content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access