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Auditor Turnover Jumped 78 Percent in 2004 Feb. 18, 2005 (SmartPros) A research report released by Glass Lewis & Co. shows that one-fourth of more than 2,500 public companies changed outside auditing firms in 2004, a 78 percent jump from 2003, The Wall Street Journal reported. Glass's research shows that small companies changed auditors most. The disclosed reasons for the switch included regulatory requirements, lower fees at the new firm, and corporate mergers. There is no law requiring that companies switch outside auditing firms, but the high turnover tells that boards of directors are doing so anyway, which contradicts the past argument by accounting firms that switching auditors reduces audit quality, WSJ cited. Also, smaller accounting firms are gaining business -- former Big Four clients. Second-tier firm BDO Siedman gained the most clients (109) while Big Four firm Ernst & Young lost the most (200). Source: WSJ 2005 SmartPros Ltd. All rights reserved. |
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