Professional Services Monitor: Today

 

June 17, 2010

FY2009 Audit Fees Updated

In April, we took a preliminary look at FY2009 audit fees, based on the the proxy statements processed at the time.  We have updated this analysis with an additional 1,500 filers, bringing the total to 3,636 proxies tracked between January 1 and June 15, 2010.

The preliminary analysis showed PricewaterhouseCoopers with a small increase in total fees.  Now, PwC has a change of -0.8%, with KPMG next among at the Big Four at -2.8%.  Among the top ten firms by total fees, only ParenteBeard had positive growth at 6.1%.

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April 20, 2010

Preliminary FY2009 Audit Fees

Filed under: ARGI,Audit Fees,News — psmtoday @ 5:04 pm

Between January 1 and April 15, 2010, we have processed 2,322 DEF-14A proxy statements, the primary form on which US public companies disclose fees paid to their auditors.  While this is by no means a complete set of data on FY2009, it does represent about 40% of what should be eventually filed.  All analysis below is based upon that set of 2,322 filers.  We will update again in two months when most of the rest of FY2009 should be filed.

Emblematic of the overall economic climate, of the 10 firms with largest aggregate fees only PricewaterhouseCoopers experienced positive growth (1.9%) between FY2009 and FY2008.  Next closest was Grant Thornton at -2.1%.  Again, this is from among the 2,322 filers noted above.

Rank Auditor Clients FY2009 FY2008 Change
1 PricewaterhouseCoopers 375 $2,271,811,789 $2,227,815,201 1.9%
2 Ernst & Young 519 $1,545,044,911 $1,615,883,337 -4.6%
3 Deloitte 338 $1,345,466,037 $1,449,723,665 -7.7%
4 KPMG 364 $1,154,240,231 $1,182,562,186 -2.5%
5 Grant Thornton 114 $81,429,078 $83,163,732 -2.1%
6 BDO Seidman 64 $52,277,852 $54,521,828 -4.3%
7 Crowe Horwath 63 $20,672,469 $21,320,724 -3.1%
8 McGladrey & Pullen 38 $13,620,403 $14,690,576 -7.9%
9 Moss Adams 20 $9,114,058 $9,615,475 -5.5%
10 ParenteBeard 36 $8,471,851 $8,003,648 5.5%
All Others 391 $86,596,459 $88,549,838 -2.3%
2,322 $6,588,745,138 $6,755,850,210 -2.5%

The 25 largest filers by total fees between 1/1/2010 and 4/15/2010 had an average growth of about 4%.  AIG’s $193 million paid to PricewaterhouseCoopers is the largest total we have tracked, eclipsing the $156 million General Motors paid to Deloitte for FY2002.  AIG’s proxy included the explanatory sentence, “The 2009 increase in audit and audit-related fees was primarily related to nonrecurring divestiture and restructuring activities related to AIA, ALICO and Nan Shan and other separate reporting requirements related to the Company’s restructuring activities.”

Rank Company Auditor (FY09) Total Fees Change
1 American International Group Inc. PricewaterhouseCoopers $193.6 Mil. 32.3%
2 Bank of America Corp. PricewaterhouseCoopers $128 Mil. 34.8%
3 General Electric Co. KPMG $110.1 Mil. -20.8%
4 Goldman Sachs Group Inc. PricewaterhouseCoopers $106.9 Mil. 6.5%
5 Citigroup Inc. KPMG $95.9 Mil. -0.2%
6 JP Morgan Chase & Co. PricewaterhouseCoopers $95.8 Mil. -12.4%
7 Morgan Stanley Deloitte $70.7 Mil. 14.6%
8 International Business Machines PricewaterhouseCoopers $66.3 Mil. -8.1%
9 Merck & Co. PricewaterhouseCoopers $55.7 Mil. 49.7%
10 Hewlett Packard Co. Ernst & Young $53.8 Mil. 9.7%
11 MetLife Inc. Deloitte $51.2 Mil. 3.3%
12 Ford Motor Co. PricewaterhouseCoopers $51.2 Mil. -11.5%
13 Wells Fargo & Co. KPMG $50.2 Mil. 48.9%
14 United Technologies Corp. PricewaterhouseCoopers $46.9 Mil. 3.5%
15 Prudential Financial Inc. PricewaterhouseCoopers $45.1 Mil. 8.9%
16 Dow Chemical Co. Deloitte $44.1 Mil. 15.6%
17 Tyco International Ltd. Deloitte $39.9 Mil. -36.1%
18 Pfizer Inc. KPMG $37.4 Mil. 25.7%
19 Verizon Communications Inc. Ernst & Young $36 Mil. 0.0%
20 Thomson Reuters Corp. PricewaterhouseCoopers $34.8 Mil. -13.5%
21 Johnson & Johnson PricewaterhouseCoopers $34.1 Mil. -13.0%
22 Honeywell International Inc. PricewaterhouseCoopers $34 Mil. -3.8%
23 Exxon Mobil Corp. PricewaterhouseCoopers $33.5 Mil. -4.2%
24 Coca Cola Co. Ernst & Young $33 Mil. -5.6%
25 AT & T Inc. Ernst & Young $31.2 Mil. -1.9%

The SEC requires companies to disclose fees paid to their auditors in four categories–audit, audit-related, tax and other.  Audit represented 79.3% of the total in this segment, and the overall distribution is essentially unchanged between FY2009 and FY2008.

May 20, 2009

More Audit Fees Lists

Filed under: ARGI,Audit Fees,Firms,PricewaterhouseCoopers — psmtoday @ 9:47 am

We wrap up the March to April proxy statement busy season with three more lists of audit fees, as a follow-up to our earlier post. We again look at largest increases and decreases from FY2007 to FY2008, and we’ve added a third list of the 10 largest total audit fees.

These 30 companies were taken from about 2400 proxies filed during March and April, 2009. The average increase in this group was about 10.0%.

PricewaterhouseCoopers clients had an average increase of 8.9%. The three of the four largest audit fees-paid in FY2008 belong to PwC clients: JP Morgan Chase, Goldman Sachs Group and Bank of America. With the large acquisitions made by each of these three companies in the second half of 2008, one might expect that audit fees increases ought to be even larger in FY2009.  Net, audit fees increased for this group of PwC clients by about $6.5 million.

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April 21, 2008

A Look at Fiscal 2007 Audit Fees

Filed under: ARGI,Audit Fees,Firms,Marketshare — psmtoday @ 3:41 pm

For those of us who track such things as “professional fees paid to auditors,” February, March and April are hectic months as December fiscal year end companies file their latest proxy statements.  Ames Research Group tracked about 1300 proxy statements and 20F filings during March 2008, and we will probably double that number during April.

Below are some preliminary findings from what we tracked during March.  All summaries are based on companies with $500 million in revenue and greater.

10 Largest Gains in Total Fees (Companies over $500 million) 

Company 07 / 06 Total Fees ($000) 07 / 06 Auditor Change
Idearc Inc.  $2,319.4 /
$500.0
E&Y /
E&Y
363.89%
Baldor Electric Co.  $3,286.7 /
$1,003.2
E&Y /
E&Y
227.60%
CVS Caremark Corp.  $8,769.6 /
$3,133.0
E&Y /
KPMG
179.91%
Domino’s Pizza Inc..  $1,986.0 /
$942.0
PwC /
PwC
110.83%
Brightpoint Inc.  $4,934.9 /
$2,364.8
E&Y /
E&Y
108.68%
Hercules Offshore Inc.  $2,108.3 /
$1,016.1
E&Y /
GT
107.49%
Simon Property Group  $12,507.6 /
$6,302.4
E&Y /
E&Y
98.46%
Mylan Inc.  $6,707.8 /
$3,478.9
D&T /
D&T
92.81%
Valassis Communications  $1,994.9 /
$1,046.2
D&T /
D&T
90.68%
NTELOS Holdings Corp.  $870.1 /
$471.9
KPMG /
KPMG
84.38%

Full Chart
 

10 Largest Drops in Total Fees (Companies over $500 million)

Company 07 / 06 Total Fees ($000) 07 / 06 Auditor Change
Walter Industries Inc.  $2,051.0 /
$7,180.0
E&Y /
PwC

-71.43%

Journal Communications  $599.2 / $1,454.3 E&Y /
E&Y

-58.80%

Altera Corp.  $2,173.0 /
$5,101.0
PwC /
PwC

-57.40%

GTSI Corp.  $1,315.8 /
$2,931.8
PwC /
E&Y

-55.12%

Odyssey Re Holdings  $5,346.0 /
$10,573.0
PwC /
PwC

-49.44%

HealthSouth Corp.  $17,000.0 /
$29,800.0
PwC /
PwC

-42.95%

Stone Energy Corp.  $550.4 /
$958.3
E&Y /
E&Y

-42.57%

KB Home Inc.  $1,373.0 /
$2,247.0
E&Y /
E&Y

-38.90%

Alpha Natural Resources  $1,705.0 /
$2,757.9
KPMG /
KPMG

-38.18%

Celanese Corp.  $6,502.0 /
$10,337.0
KPMG /
KPMG

-37.10%

Full Chart
 

Average Fees Change, FY06 to FY07 (Companies over $500 million)

Fiscal 2007 Auditor Avg. Change
Grant Thornton 12.4%
Moss Adams 10.5%
D&T 10.3%
E&Y 8.9%
Dixon Hughes 7.0%
Crowe Chizek & Co. 4.9%
KPMG 3.0%
Porter Keadle Moore 2.7%
PwC 0.1%
Battelle & Battelle -3.7%
McGladrey & Pullen -6.4%
BDO Seidman -10.3%
  5.2%

August 22, 2007

New Study on Audit Fees

Filed under: ARGI,Audit Fees,Marketshare — psmtoday @ 2:56 pm

The Financial Times this afternoon has an article on a new study from The Corporate Library on how the audit industry has changed since 2001.

In a sign of the explosion in audit activity since the passage of the Sarbanes-Oxley compliance law, the median fees earned by the world’s top auditing firms shot up by 345 per cent in the five years to 2006, a study said on Wednesday.

The findings came in a study of 100 auditing firms and 1,300 companies by The Corporate Library, a respected US corporate governance research firm which billed it as “the most extensive study of the audit industry ever published”.

More information on the report is at The Corporate Library website.

Ames Research Group also tracks audit fee data, processing about 40,000 proxy filings since February 2001. Some of this data is available in our 2007 Big Four Annual Report.

Link: Top auditors’ median fees up by 345 per cent – Financial Times

August 17, 2007

BDO Seidman US Marketshare

Filed under: ARGI,Audit Fees,Firms,Marketshare — psmtoday @ 11:50 am

With BDO Seidman’s future in the US audit market now the subject much speculation and discussion, it might be useful to look just how big their US marketshare is.

BDO Seidman audits approximately 305 US-based “public” companies—meaning they file a 10K with the SEC. Not all of that number are currently trading. Furthermore, this excludes mutual funds and benefit plan audits. By that measure, BDO Seidman is the the 2nd largest 2nd tier firm, behind Grant Thornton with about 50 more clients. KPMG is the closest Big Four firm, with almost 3 times more clients.

Those 305 clients represent between $75 and $80 billion in annual revenue audited by BDO Seidman. Using quick, automated look at market capitalization from Google Finance this morning, BDO Seidman audit clients total approximately $95 billion in client market capitalization. In fiscal 2006, the firm received $156 million in audit fees from about 210 clients, as disclosed on company proxy statements. For comparison, Grant Thornton had $171 million from 260 audit clients in fiscal 2006.

Among BDO’s largest clients are Barnes & Nobles, Jones Apparel, and Forest Labs. Notable audit engagement wins for BDO in 2007 include Westaff (from Deloitte), Cambrex (from PwC), and Spartan Motors (from E&Y). The firm has been the auditor for two IPOs this year, but both are small, developmental stage companies. Furthermore, BDO, as a smaller firm, has a large client base among private companies, including PBS, Red Apple Stores and Colonial Group.

May 14, 2007

ARGI Releases 2007 Big Four Annual Report

Released today, ARGI’s 2007 Big Four Annual Report is the leading, comprehensive analysis of annual Big Four market share and operating results. The report uses a special methodology to analyze firm results and covers all areas critical to major professional service organizations.

2007 Big Four Annual Report cover

For 2007, the Report assesses trends and issues such as “Public Accounting in the Public Eye,” the need for world-class talent, the Post Crisis SOX 404 environment, and prospects for Big Four growth in the next 5-10 years. The report also provides an overview of important market share metrics, such win and losses, net audit market share gain in 2006, and total professional fees billed to public companies during 2006.

In other words, the Big Four Annual report offers an independent and objective comparison of the Big Four firms in clear measures. The biggest firm by revenue, the most profitable firm for partners, the firm with the most employees, and the firm with the highest average per-client fees are all questions answered.

Ordering information, along with sample pages from the report, are available from the Annual Report’s product page. Questions on the report may be directed to sales@amesrgi.com.

April 11, 2007

An Early Look at Fiscal 2006 Audit Fees

Filed under: ARGI,Audit Fees,Deloitte,Ernst & Young,Firms,KPMG,PricewaterhouseCoopers — psmtoday @ 10:24 am

We are in the midst of the busy March to May proxy season, during which companies with a November or December fiscal year-end file their proxy statements. Beginning in 2001, proxy statements have been the document in which companies disclose how much they are paying their audit firm. Ames Research Group has been tracking and processing these fees disclosures from the beginning.
We are about 1,100 filings into the 2007 season, with enough data in hand to take a preliminary look at some trends. Somewhat surprisingly, average fiscal 2006 fees are up from 2005 for all Big Four firms.

Fiscal 2005 to 2006 Fees (prelim)

Every firm, including non-Big Four firms taken as a whole, has an average increase of about 4%. Ernst & Young doubles every other firm with a more than 9% increase. In terms of total fees, PricewaterhouseCoopers has totaled $1.4 billion. The Big Four’s total fees represent nearly 98% of all fees disclosed. In other words, non-Big Four firms received only 2% of the total fees in this group of companies.

To be clear, the population of company represented here is only preliminary. We analyzed 1,100 US fees disclosures for fiscal year-ends in November and December 2006. Excluded are companies with a different auditor between FY 2006 and 2005, and those including fiscal-year transition periods, or where some other substantial ambiguity exists in the fees disclosure.

For some perspective, read some of our earlier posts on the subject of audit fees, “A Summary of Professional Fees” and “ARGI Data Shows Audit Fees Fell in FY2005″.