Big Four client 'cull' may be selective
The Big Four accountancy firms' policy of 'culling' high-risk clients may be influenced by the size of audit fees companies bring in, according to a new study.
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A survey by Glass Lewis, an independent research firm, has concluded that different criteria may be applied to audit clients considered to be the best cash cows.
The survey, which related to more than 905 changes of auditor in the US in 2003, showed that despite some movement of audits to smaller rivals, larger accountancy firms had maintained business from larger companies, the Financial Times reported.
The Big Four have openly said they intend to implement more stringent risk management policies to dispose of riskier clients.
But the report said: ‘We believe in actual practice, the Big Four firms may apply one set of risk criteria to large companies with larger audit fees, and a different set to smaller accounts that are likely to be less profitable.’