According to estimates from several firms, some mid-tier firms have earned up to £5m each so far in new fee income from work that was once the preserve of the Big Four in several areas – including audit, corporate finance and tax.
Paul Ginman, technical director at Baker Tilly International, said his firm had earned #1m in new fees directly as a result of the controversial Sarbanes-Oxley legislation.
‘Since the beginning of the year we have got a number of assignments in which we have seen clients dividing up their audit and other services,’ he said. ‘A number of companies have seen people at shareholder meetings saying they are not happy to receive all their services from the firm that does their audit. It started after Enron, but with Sarbanes-Oxley the process has been speeded up.’
Ginman added: ‘This is undoubtedly likely to continue. A lot of work is changing hands and the trend will mean more work for the mid-tier.’
He added that, in the past, banks had pushed the Big Four because of their global renown, but following the accounting scandals, they are not thought of as the only credible global accountants.
Nick Winters, audit partner at PKF, said he had won four lucrative audit accounts from former Big Four clients, including Silk Industries, which used Deloitte & Touche, and Law Debenture Corporation, which was with PricewaterhouseCoopers.
Mid-tier firms say it is difficult to estimate the full impact of problems with conflicts of interest. ‘It’s too early to say,’ said Mark Bomer of BDO Stoy Hayward. ‘But the market will open up to mid-tier firms.’
A KPMG spokesman said: ‘We’ve no experience of losing business. Most large companies use the Big Four because of their geographical scale.’
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