PracticeAuditE&Y costs too much

E&Y costs too much

Financial research house dumps Ernst & Young in favour of Smith & Williamson over cost of audit

Prohibitive audit costs have forced financial research house Stockcube to
dump Big Four auditors Ernst & Young in favour of Smith & Williamson.

The AIM-listed company, which has a market cap of £3.3m and revenues of
£2.4m, paid Ernst & Young £69,000 for audit and non-audit services according
to its latest annual report.

‘The main reason for changing auditors was cost. We will be paying lower
audit fees with Smith & Williamson in place,’ a Stockcube spokesman said.

He added that another reason for the decision was that the Ernst & Young
partners who had listed Stockcube in May 2000 had moved on, and that the end of
the relationship also prompted the change.

Stockcube’s decision to appoint a mid-tier auditor came as Grant Thornton’s
managing partner renewed calls for UK companies to look beyond the Big Four.

In a letter to Accountancy Age, Michael Cleary said: ‘There might be
as few as 100 UK companies that, through the sheer scale of resources needed,
can only be serviced by a Big Four firm.

‘It is among the 1,400 full list companies, where the problem lies in
competition and choice in the audit market. Addressing this over the next few
years might provide a platform to attack the Big Four stranglehold.’

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