KPMG soars past PwC to take over as leader in FTSE 100 audit market
Big Four rival KPMG overtake PwC as main auditor of UK’s top companies
PwC now audits only 27 of the FTSE 100 companies while fellow Big Four firm KPMG audit 28.
Data gathered by Adviser Rankings reveals that this is the first time top accountancy firm PwC have lost its top spot as auditor of the most blue-chip firms in the UK.
PwC however does continue to lead as the accountancy firm with the biggest client market cap.
Moreover, it continues to audit the most FTSE 250 firms in the UK.
John Wood Group Plc was KPMG’s extra FTSE 100 client to push them up to the top spot. The group is an energy services company which was promoted to the FTSE 100 in October this year.
Each auditor of FTSE 100 companies decreased in representative value, apart from BDO which has now moved into fifth place. The accountancy firm merged with other top ten firm Moore Stephens earlier this month.
BDO also holds the title of the top AIM auditor as it currently has 149 clients. Big Four firm EY boasts the most new clients overall, with their number increasing by 10 from 225 to 235.
The shift in audit clients between top accountancy firms is likely due to new EU legislation which was introduced in 2016.
The ruling means companies must tender audit contracts after ten years and then swap auditors after 20 years.
In November, Lloyds Banking Group became a key, real-life example of this new ruling as it announced Deloitte would be taking over as its new auditor in 2021, severing a 153-year tie with PwC.
New laws were intended to break ‘too-close’ ties between top companies and their accounting firms as well as tackle the issue of too much power in the hands of the Big Four.
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Instead what seems to have happened is a battle between PwC, Deloitte, EY, and KPMG has begun to win clients off each other.
The FRC has criticised the change as being ineffective and failing to encourage diversification. If FTSE 100 companies are simply being passed between Big Four competitors, no real transformation is taking place.
It is reported that approximately 20 FTSE 100 businesses have had the same auditor since 2008, meaning they will be due a new one in the next ten years and hundreds of billions of pounds in market cabs will become available.
In other words, there is more difficulty to come for the Big Four as they prepare to suffer upcoming mandatory rotations of companies. KPMG and PwC have the highest value FTSE 100 customers with approaching rotations as the former gets ready to bid farewell to BHP and Prudential while the latter will lose Lloyds.