When a company you audit employs another Big 4 firm to help them with other work, tax for example. How worried is the engamenet partner the company might be open to switching auditors in the future?

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A lot of companies don’t want to have to deal with potential independence issues of having one firm provide audit and non-audit services so they tend to stick with one firm for audit and let the others do the non-audit.

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The bigger the company, the less likely they are to change auditors. When they do, it’s an ordeal. Go look at the audit opinions of some of the biggest companies you can think of and see how long their firm has been auditing them. I just pulled up GS as an example. PwC has been doing that audit since 1922.

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Yeah, all of my client use all 4 firms for something (e.g.1 for audit, 1 for tax, 1 for valuation, 1 for tech/ERP systems, etc.).

Honestly if a firm is getting high-value tax work from a company, they probably wouldn’t be interested in becoming the auditor. Audit work is much lower margin and it really limits the kinds of services you can provide.

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It really depends on the audit fee.

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The tax work is almost certainly worth more, profit wise, if they’re an SEC public client. It’s much easier to lose the tax work - or parts of it - than it is to lose the audit. And no client has the thought process “PwC does my taxes good, I think I’ll switch my audit to them.” In fact, for some types of tax work, you can’t use the tax service provider if they’re also your auditor. So ... prob not a factor.

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This!!!! The margins on supporting an audit team auditing an income tax provision, income tax returns, withholding tax reporting, sales tax reporting, and 1040 prep for employees who are expats are very low margin work. This really the only type of work allowed by the PCAOB.

The real money is tax planning, tax consulting, tax deal work. The margins on that work is crazy good but the PCAOB doesn’t allow it for audit clients.

Some large companies are working with multiple B4 all the time.

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I’ve literally been on an engagement where all 4 of the Big 4 were on the same floor for some reason or another. EY was the auditor, PWC was doing IA/risk work, Deloitte and KPMG were both doing some technology implementation work

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People in here talking about margins, but if you look at the market, any time a fortune 100 audit comes up for bid, each big 4 firm tries to become independent and win it. Even when they have size-able Advisory relationships. You just can’t beat the annuity and size of these large audit engagements.

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It can be a good thing. Then they arnt independent and can’t even get the audit done by them. Then the consulting fees could be much more than the audit, so the audit becomes even more safe. One less competitor.

Pretty sure the other firms are happier with their consulting margins. No need to roll the die with the pcaob

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