BDO passes Big Four audit contract tally in UK

The dominance of the Big Four on the UK’s auditing market has taken a knock, with the news that BDO now holds more listed audit clients than PwC, KPMG, EY or Deloitte. In spite of this, however, the quartet remain far larger in terms of revenue, having managed to hold on to the bulk of their most lucrative clients – even in the face of major regulatory changes.

With a continuing series of high profile oversights in auditing work having led to the demise to a succession of major British companies, the accounting dominance of the Big Four has fallen under intense scrutiny. A growing number of experts and parliamentarians are suggesting that Big Four firms KPMG, Deloitte, PwC and EY should be made to divest their UK consulting wings, which they believe lead to conflicts of interest behind the accounting errors.

While the Financial Reporting Company has resisted calls to formally break up the Big Four, it has stepped up its efforts to police the auditing profession on two fronts – announcing rules to force top accounting and advisory firms to separate profits relating to their different lines of work and stinging the country’s largest professional services firms with record fines for their alleged shortcomings. This has led critics of the FRC to brand it as “toothless.” However, according to new figures from Adviser Rankings, which collects auditor data in Britain, the measures may already be impacting the market.

BDO, the UK’s fifth-largest accounting firm by revenue, gained 36 listed clients in the 12 months leading to October 2020 – and according to Adviser Rankings, this makes it the top UK accounting firm by listed clients. It now audits 310 London-listed firms, having jumped up from 274 in the previous year, in stark contrast to the Big Four members it has leapfrogged. PwC, it’s closes rival, now holds 307 listed audit clients, 46 fewer than in 2019.

More notably perhaps, KPMG – now the company with the third most listed audit clients in the UK – has been haemorrhaging contracts in the last 12 months. KPMG held 312 this time last year, but lost 52 since then – more than the 17 EY lost, or the 27 Deloitte dropped, combined. This could be because KPMG has suffered a bigger reputational dent thanks to its work in high-profile roles such as collapsed outsourcer Carillion – something which previously saw it placed on special measures by regulators.

BDO’s recent auditing appointments include Oxford Instruments, Foxtons, Wincanton and Ted Baker – however, according to further analysis by The Times, the company is still struggling to make ground among the most lucrative clients. The UK paper reported that BDO’s gains are mainly thanks to a rise in clients among smaller companies, and the firm still has no audit clients in the FTSE 100, while it only holds 17 in the mid-cap FTSE 250 share index.