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%.


November 18, 2009

Auditor Market Share Lists: A Tale of Three Cities

In another look at audit marketshare, below are the total FY2008 fees, average FY2008 fees per client, and number of clients in three cities—Chicago, Denver and Seattle—based on the city from which the firm is serving a client. That is, the data is grouped on the office of the firm signing off on the client’s financials. This is often the same city as the client’s headquarters, but not always. The data is taken from Ames Research Group’s audit fees database, sourced primarily from DEF-14A proxy statements.

More lists are available on our Auditor Marketshare page.

Fees are listed in $US millions.


Firm Total Avg Clients
Deloitte $198.5 $5.7 35
Ernst & Young $128.4 $2.7 47
PricewaterhouseCoopers $101.9 $4.2 24
KPMG $90.3 $3.0 30
Grant Thornton $9.8 $0.8 12
BDO Seidman $6.7 $0.6 12
Blackman Kallick Bartelstein $1.1 $0.4 3
McGladrey & Pullen $0.4 $0.2 2
Plante & Moran $0.3 $0.3 1
Crowe Horwath $0.2 $0.2 1
Virchow Krause & Co. $0.1 $0.1 1
Wipfli $0.1 $0.1 1


Firm Total Avg Clients
Deloitte $51.1 $3.6 14
KPMG $39.3 $2.1 19
Ernst & Young $26.8 $3.0 9
PricewaterhouseCoopers $7.8 $1.0 8
Grant Thornton $1.8 $0.5 4
Moss Adams $1.5 $0.4 4
Peterson Sullivan $0.8 $0.2 5
Schwartz Levitsky Feldman $0.3 $0.3 1
McGladrey & Pullen $0.3 $0.3 1


Firm Total Avg Clients
KPMG $55.2 $3.1 18
Ernst & Young $45.9 $2.7 17
PricewaterhouseCoopers $26.2 $2.9 9
Deloitte $13.7 $1.2 11
Ehrhardt Keefe Steiner Hottman $5.8 $0.3 17
Grant Thornton $4.2 $0.5 8
Hein & Assoc. $2.8 $0.3 11
GHP Horwath $1.2 $0.2 5
BKD $1.0 $1.0 1
Crowe Horwath $0.6 $0.6 1
Causey Demgen & Moore $0.4 $0.2 2
Eide Bailly $0.3 $0.3 1
McGladrey & Pullen $0.1 $0.1 1
Gordon Hughes & Banks $0.1 $0.1 2
Stark Winter Schenkein & Co. $0.1 $0.1 1

July 31, 2009

BDO Releases FY2009 Revenue, Down 5.9%

Filed under: Firms — psmtoday @ 8:11 am last night reported that BDO Seidman’s fiscal 2009 revenue fell by 5.9%.

BDO Seidman said its revenue for the fiscal year ended June 30 fell 5.9 percent to $620 million from last year’s revenue of $659 million.

However, the firm said its tax business line experienced revenue growth of 6 percent. BDO’s assurance business fell 9.1 percent and its BDO Consulting business decreased 15.3 percent from last year’s high. Over the past four fiscal years, BDO Seidman has averaged double-digit growth of 10.2 percent.

July 17, 2009

Auditor Market Share Lists: DoD Contractors

Filed under: ARGI,Deloitte,Firms,KPMG,PricewaterhouseCoopers — psmtoday @ 2:30 pm

This afternoon, we have posted a new list to our Audit Market Share list section, a list of the Department of Defense’s largest contract recipients for FY2008.  We have followed this list for 15 years, and this is the first time we can recall that any of the Big 6/5/4 have appeared in the top 100.  Furthermore, BearingPoint received nearly $750 million in defense contracts, some of which will presumably go to Deloitte and PwC in Fy2009, all other things remaining equal.


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.


April 8, 2009

Auditor Market Share Lists: Audit Fees Increase/Decrease

Filed under: ARGI,Firms,KPMG — psmtoday @ 12:47 pm

Two more lists have been added to our Auditor Market Share Lists.  These lists provide the 10 companies with the largest increases and decreases in total audit fees, among proxy filers in March 2009.

These 20 companies were taken from more than 1000 proxies filed during March.  The average increase in this group was about 6.1%.

KPMG clients, for one, have an average increase of 10.9%.  Boise Inc., a KPMG client, had the largest increase in fees at more than 1500% between FY2007 and FY2008, although McGladrey was Boise’s auditor for FY07.  Furthermore, as notes, Boise Inc. “was formed in 2008 when Aldabra 2 Acquisition Corp. purchased the paper and packaging assets of Boise Cascade.”  Synovus Financial was the KPMG client with the largest decrease, -60%.


April 2, 2009

New Century Trustee Files Suit Against KPMG

Filed under: Firms,KPMG,Liability — psmtoday @ 12:12 pm

KPMG is being sued for “no less than $1 billion in compensatory and consequential damages” by the bankruptcy trustee for New Century Financial.

The trustee overseeing the bankruptcy of subprime lender New Century Financial Corp. filed suit against its auditor, KPMG LLP, claiming that “reckless and grossly negligent audits” helped accelerate the firm’s collapse two years ago.

The lawsuits filed Wednesday said that specialists at KPMG tried to point out errors in New Century’s financial statements but were silenced by the KPMG partner in charge of the audits “to protect KPMG’s business relationship with, and fees from, New Century.”

Francine McKenna, of Re: The Auditors fame, is quoted in the story, saying that if the suit is successful, “it may embolden others to look more closely at the possibility of bringing [accounting] firms to some level of culpability for the things that happened” that led to the credit crisis.

KPMG spokesman Dan Ginsburg said, “KPMG acted in accordance with professional standards in New Century, and we will vigorously defend our audit work. Any implication that the collapse of New Century was related to accounting issues ignores the reality of the global credit crisis. This was a business failure not an accounting issue.”

New Century disclosed a total of $10.4 million in fees between fiscal 2002 and 2005.

Fiscal Year Audit Fees Total Fees Fees-to-Revenue
2005 $2,319,347 $3,808,781 0.16%
2004 $1,783,100 $3,576,708 0.21%
2003 $705,900 $1,625,959 0.17%
2002 $355,000 $1,450,000 0.24%

March 24, 2009

Deloitte & PwC Purchase Business Units from BearingPoint

Filed under: Consulting,Deloitte,Firms,PricewaterhouseCoopers — psmtoday @ 5:16 pm

Deloitte and PricewaterhouseCoopers separately announce their purchases of business units BearingPoint in North America.

Deloitte will “acquire substantially all of the assets” of BearingPoint’s Public Services practice.

Deloitte today announced that it has signed an asset purchase agreement to acquire substantially all of the assets of the North American Public Services practice of BearingPoint out of bankruptcy for total consideration of $350 million in cash and the assumption of certain BearingPoint liabilities. BearingPoint is a global management and technology consulting company that filed for Chapter 11 bankruptcy protection on February 18, 2009. The agreement is subject to approval by the bankruptcy court, which may consider competing bids, and there can be no assurance that the purchase will be consummated.

PwC announced its own acquisition of BearingPoint’s North American Commercial Services practice.

he United States firm of PricewaterhouseCoopers LLP (PwC) today announced that it has reached an agreement in principle with BearingPoint, Inc. to acquire portions of BearingPoint’s North American Commercial Services practice, which includes its financial services segment. At the same time, PwC Advisory Co., Ltd. (PwC Japan), a PricewaterhouseCoopers firm operating in Japan, has reached an agreement in principle to acquire and integrate with BearingPoint’s entire Japan practice consulting business, which has a leading position in the business consulting market.

In the United States, the proposed transaction will integrate selected contracts and assets of BearingPoint into PwC’s Advisory practice, while bringing to the firm client service professionals with significant business and consulting expertise in industries including energy, utilities, insurance, pharmaceuticals and life sciences.

In Japan, the strength of BearingPoint’s business means that this transaction will create a combined team of over 1,500 professionals which will be one of the largest advisory practices in the Japanese market.

The Washington Post reported that PwC will pay $25 million for the unit.

In BearingPoint’s Fy2007 Annual Report, Public Services and Commercial Services comprise two of BearingPoints three principal North American units, with Financial Services being the third.  Public Services generate $263 million in gross profit in Fy2007, and Commercial Services $82 million.

March 5, 2009

Deloitte Issues Going Concern Opinion on General Motors

Filed under: Deloitte,Firms,SOX 404 — psmtoday @ 10:40 am

In GM’s 2008 10-K, filed this morning, Deloitte’s audit opinion contained a “going concern” clause:

The accompanying consolidated financial statements for the year ended December 31, 2008, have been prepared assuming that the Corporation will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Corporation’s recurring losses from operations, stockholders’ deficit, and inability to generate sufficient cash flow to meet its obligations and sustain its operations raise substantial doubt about its ability to continue as a going concern. Management’s plans concerning these matters are also discussed in Note 2 to the consolidated financial statements. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Furthermore, Deloitte’s 404 opinion on internal controls states that GM did not maintain effective internal controls due to a “material weakness related to ineffective controls over the period-end financial reporting…”
GM Auditors Raise Warning On Bankruptcy Risk : NPR

Although GM has warned for weeks that its cash-flow position was being eroded, Thursday’s announcement in an annual report filed with the U.S. Securities and Exchange Commission shows the full gravity of the situation as auto sales plummet to their lowest levels in more than a quarter century and revenue continues to drop sharply.

GM has already taken $13.4 billion in government loans, but the company has been unable to cut costs fast enough to stop the bleeding. Executives say they need another $16 billion to survive.

February 18, 2009

BearingPoint Files for Bankruptcy

Filed under: Consulting,Firms — psmtoday @ 10:37 am

BearingPoint Inc., the consulting firm spun-off from KPMG in 2001, has filed for bankruptcy protection.

BearingPoint Inc. said it filed for bankruptcy-court protection after reaching a deal with its lenders as part of a debt-reduction effort.

The McLean, Va., management and technology consulting firm said its operations based outside the U.S. aren’t included in the filing and won’t be affected.

BearingPoint had been reporting weakened results for some time, and in late 2007 named a new chief executive in hopes of turning around its fortunes.

Wednesday, BearingPoint’s stock was trading around 30 cents on the over-the-counter bulletin board. The stock traded at a split-adjusted $60 on Sept. 3, accounting for a 1-for-50 reverse split in December before careening to a split-adjusted $1.50 in November amid concerns about the company’s viability.

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