Catapult Communications Corporation recently announced that it is changing accounting firms. What was intriguing about the press release was the detailed reason given for changing from a Big Four to a regional firm. It made the change “to significantly reduce its accounting expenses.”

Catapult estimates that expenses would be approximately $985,000 for the current fiscal year without a change. In consultation with its audit committee, it believes that by engaging a regional firm it will realize significant savings.
Based on estimates received from the two firms, Catapult believes that the savings for fiscal 2008 from the change in firms will be in the range of 43 to 49 percent.  That is just under a half a million dollars in anticipated savings.

When competing with the nationals, regional firms usually claim they can offer the same quality service, with more personal attention, at a lower price. That might explain many of the changes, but I have never seen a press release stating the actual dollars and cents reasoning for the change. Usually, absent an impending lawsuit, the releases are very innocuous, and the break-up presented as an amicable parting of the ways with no explanation given for the ending of the relationship.  

Allan Koltin, noted consultant and president and CEO of PDI Global, Inc., in commenting on the release observes, “The feeding at the Big Four is so good right now that these ‘smaller clients’ are forced to pay ‘big firm' rates, and if they don’t like it they can walk. It’s just business and a sign of the times. 

Is this firm change announcement a quirk, some type of rebellious outburst by a company, or a trend? At initial glance, it puts the Big Four in an unfavorable light, and showcases regional firms as a reasonable and effective alternative. I expect a number of readers in the accounting profession to bristle when they read the press release. They will probably view the details in the press release as particularly bothersome. It will be interesting to see if other companies express themselves in a similar manner, whether in a press release or when re-negotiating with a Big Four firm.

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