Mid-tier exploits Big Four doubts
The backlash against the large accountancy firms has begun, with several mid-tier firms reporting increasing referral work from the US following recent corporate accounting scandals.
Link: Mid-tiers back auditor rotation
Mid-tier firms have found that they are winning work that in the past would have been referred to one of the Big Four firms.
But a lack of competition and perceived conflicts of interest have forced companies to use the international networks of mid-tier firms to find advisers overseas.
‘We have seen a threefold increase in opportunities from the States,’ said Danny Foran, BDO Stoy Hayward’s North American liaison partner.
Foran said the increase was not only due to conflicts of interest among the Big Four and also a result of the firms becoming too stretched servicing former Andersen clients.
‘Non-Fortune 500 clients are not taking quite the same priority as before, and when the firms try to crank up their fees, these clients aren’t prepared to pay,’ Foran said.
Foran said BDO Seidman, the US affiliate of BDO’s international network, had referred a significant amount of audit and international tax work to its UK counterpart.
‘Companies with UK operations are being pushed to us,’ he said.
Grant Thornton has seen a similar pick up in referral work in recent months. ‘The travails of the Big Four and the lack of competition is leading to these referrals,’ said Steve Maslin, the head of assurance services at Grant Thornton.
According to Maslin, Grant Thornton’s international network has referred two ‘substantial’ US clients to the UK offices which they hope to sign up in the next week or so.
Maslin said that conflicts were also leading to an increase in work in more specialised areas such as forensic accounting.