Atlanta (Jan. 28, 2004) -- For the first time in at least a decade, all of the Big Four firms lost more public company audit clients than they acquired in 2003, while their B-level counterparts picked up a collective 21 percent of the clients lost by the Big Four, according to a report by Auditor-Trak.
PricewaterhouseCoopers suffered the biggest decline with a net loss of 91 audit clients, reducing the firm's audit client revenue by $46.4 billion and cutting its client assets under audit by $543 billion. Auditor-Trak said it considers revenue for most public company audit clients but assets for certain financial services and other investment-oriented companies.
KPMG recorded the smallest decline with a net loss of 51 companies. The firm gained a net $59.7 billion in combined client revenue audited, and lost $17.3 billion in client assets under audit, according to the report. Ernst & Young finished 2003 with 76 fewer audit clients -- a decline of $24.5 billion in client revenue audited but an increase of $150.9 billion in assets. Audited client revenue at Deloitte & Touche -- which had a net loss of 65 clients -- fell $45.6 billion, but its assets under audit rose $394.9 billion, Audit-Trak reported.
"After the rapid growth of the Big Four's audit client lists in the wake of the 2002 collapse of Andersen, we expected 2003 would be a year of rationalization of their client bases -- and that has clearly taken place,” said Richard Ossoff, publisher of Auditor-Trak. “We expected to see increased client selectivity on the part of the firms in light of the new Sarbanes-Oxley environment. However, these circumstances alone do not seem to fully explain the extent of these client losses."
Grant Thornton, BDO Seidman and McGladrey & Pullen collectively acquired 21 percent of the clients lost by their Big Four competitors. Roughly a third (34 percent) of the public companies that formerly used a Big Four auditor opted for a regional or local firm as a replacement, the report said.
KPMG lost Neuberger Berman Inc. and Spiegel Inc. but picked up Sprint Corp. and AutoNation Inc. as audit clients last year. Deloitte lost Denny's Corp. and CITGO Petroleum Corp., but added Royal Bank of Canada and its U.S. unit, RBC Centura Banks. Meanwhile, E&Y lost the American Skandia Life Assurance Corp. and Steak n Shake Co., but nabbed U.S. Bancorp and Clorox Co., while PwC gained Calpine Corp. and Carnival PLC, but lost Kmart and Pharmacia Corp.
-- WebCPA staff
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