PwC loses lead over FTSE 100 audit rivals
Mandatory tending and rotation of auditors may not have widened the competition at the top of the UK audit market but they have certainly led to a rebalancing among the Big Four players
The latest quarterly all market auditor client rankings reveals that the reshuffle of FTSE 100 clients has reduced PwC from outright leader of the pack to joint first place with KPMG and Deloitte.
PwC’s change in circumstance was predictable, given the introduction of time limits on audit tenures and the number of its clients with whom it maintained lengthy relationships. Examples include the 120 years it audited Barclays Bank and the 31 years with Legal & General. Both audits have gone to KPMG. In 2011, the firm accounted for 47% of the FTSE audit fees.
According to Adviser Rankings which compiles the quarterly lists, in the past three months, PwC has won the audit of Johnson Matthey but lost BT, Legal & General, and GlaxoSmithKline, while KPMG has acquired BT, Legal & General, Smurfit Kappa and Reckitt Benckiser and lost Johnson Matthey, BAE Systems and Rolls Royce Holdings.
Deloitte meanwhile has added Old Mutual, BP, BAE Systems and GlaxoSmithKline to its client list and lost none.
Despite the changing profile of the audit market, PwC still has a comfortable overall lead by total client market capitalisation (£1,812.1bn compared to second placed KPMG £1,205.6bn). It also retains its grip on FTSE 250 audits with 73 clients, compared to KPMG’s 64, Deloitte’s 62 and EY’s 43, and leads the small cap/fledgling market with 94 clients.
But KPMG – the smallest of the Big Four – beats it into second place when it comes to the total number of stock market clients: it has 382, compared to PwC’s 358. Third place goes to Deloitte (263), followed by BDO (236) and EY (225).
Grant Thornton and BDO, ranked fifth and sixth respectively, each have one FTSE 100 client and four FTSE 250 clients. However, BDO has more AIM audit clients (145) than any of its rivals – 15 more than KPMG and 26 more than Grant Thornton.
As far as FTSE sectors are concerned, KPMG audits the most clients in consumer services (46) and financials (149) and shares first place with Grant Thornton (27 clients each) in technology.
PwC has the most audit clients in consumer goods (33), healthcare (24), and industrials (66) and shares joint first place with BDO in oil & gas (22 each). BDO tops the basic materials sector with 34 clients.
Originally published in Economia on 4 September 2018.