Proving Big Four isn’t best

The old adage in government goes something like this: “all politics is
Not so with auditing. “Bigger the better” might be the comparable saying, or so
the top end of town would have us believe.

Audit is about brand and if that logo at the bottom of the report is not
backed up by a company with offices in 16 time zones and five continents then
what’s the point of paying the high price tag?

Perhaps in the past, mid-tier businesses were happy to pay a premium for that
stamp of approval, but if you believe some of the 8,175 audit firms which aren’t
in the Big Four, these days businesses are thinking twice.

Melissa Bowers, of Macclesfield-based firm Harts LLP, is sensing, that times
are changing. New clients are scrutinising their costs in the recession and
increasingly opting for a local firm.

“Certainly people are a lot more cost conscious. They’ve started to say ‘we
can’t just look at the big names any longer, it just can’t be about our
vanity’,” she said.
As evidence she referred to a recent contract win from a client who had remained
with the same Big Four auditor for 35 years.

According to Bowers small businesses feel that a partner will be carted in to
sign off on a deal, but all the grunt work is done by junior workers.

Barry Lewis, senior partner with Harris Lipman, said he has had clients
threaten to take their money out of banks which insist a Big Four auditor sign
off on their accounts.

Michael Good, a partner with Oxford based firm Critchleys, said businesses
are waking up to the fact that the “comfort factor” is not worth the massive
price tag. “We’ve certainly taken a number of clients based on audit tenders not
just from the big four, but other significantly larger firms than ourselves,” he

But can the Big Four really expect to overlook some of their smaller pay
On August 5, Deloitte reported revenues down 2% with income dropping below the
£2bn mark.

In the same month Ernst & Young’s audit chief John Flaherty said he
hasn’t seen this amount of audit re-tendering since the turn of the millennium.

Add to this mix a number of high profile audit switches and the overall
picture is one of an industry under pressure ­ or potentially top heavy.

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