Attestation Update – A&A for CPAs

Technical stuff for CPAs providing attestation services

Is this what an oligopoly looks like?

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Here’s what the concentration of public company audits looks like:

  • $26.4 trillion global market capitalization
  • >98% – share of market cap audited by Big 4
  • 1.1% – share of market cap audited by next 3 firms
  • <0.9% – share audited by remaining 707 CPA firms registered with PCAOB who audit a public company

That is according to comments by PCAOB board member Jeanette Franzel as reported by Accounting TodayPCAOB Mulls Deregistering Hundreds of Accounting Firms.

I just have to do the math:

  • Firms – market cap of audit clients
  • 4     –   >$25.9T
  • 3     –   $0.29T
  • 707 –   <$0.24T

And of course I had to calculate the average per firm.

For the Big 4, that would be an average of $6.48 trillion of market cap of clients per firm. The smaller 707 firms on average audit clients with total of less than $0.34 billion market cap, yes about $340 million.

The ratio of average cap of audit client for Big 4 to small 707 is around 19,000:1.

Written by Jim Ulvog

July 18, 2013, 7:05 am at 7:05 am

Posted in Audits

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