Should I change audit firm to big 4 firm

Should I change audit firm to big 4 firm

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Dear all

I am thinking about having my company's audit done by a big 4 firm but I have read a lot about their partners misconduct and audits not being done properly which means a lot of wasted money for my company.

Are the big4 just for multi-national companies where standards are not as good and nobody cares what they do but for smaller companies the incompetence etc really matters.

On the one hand a big4 firm has celebrity type status which appears to be ill-founded and on the other hand the service is inferior.

Everybody recognises a Big4 firm. That seems to be the only advantage.

 

Replies (9)

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By tom123
08th Feb 2015 09:11

Who gets to see your accounts?

Is there a reason why you think you would benefit? Would your users be sufficiently impressed to invest more money or something? Are you looking to become listed etc?

If you are currently serviced by a local one office firm, you could maybe think about moving to a top 20 firm - the fees would increase, of course, but you would probably still get a fairly personal service.

When I worked for a company audited by big4, we had to type up our own statutory accounts prior to auditing - do you have the in house skills to do that?

The big4 firms didn't get where they are by chance - but I do believe in horses for courses.

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Out of my mind
By runningmate
08th Feb 2015 10:07

Tell us more

What is the annual turnover of your company? Does your company require a statutory audit?  Does your company form part of a group of companies which require consolidated accounts? Do you have any business premises outside the UK? Do your own staff prepare the statutory accounts prior to audit?  Do you require any assistance with personal tax returns?  Does your bank want you to use a different firm of accountants?  What is the current annual accountancy / audit / tax fee?

What benefit would you expect from using a Big4 firm?

RM

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By undecided
09th Feb 2015 03:20

Dear all

 

Many thanks for your replies.

Turnover will be £17m in the year to 31.3.15.

Manufacturing plants and offices in  5 European offices, Australia, 3 offices in North America and distributors in Canada and South.

We have a small accounts department which could complete pro forma accounts/template.

Directors tax returns are completed by Audit firm.

What most concerns me are the reports of complaints against Big4 partners.

 

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By NHGlos
09th Feb 2015 08:36

Why?

What's you motivation for changing firms?

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paddle steamer
By DJKL
09th Feb 2015 10:03

Presume UK Company with

Presume either

a.UK Company with overseas branches/ presence?

b. Group structure?

As plant/ employees/stock etc located overseas presume existing auditors travel (in case of (a)), and also audit the subsidiaries in case of (b)? 

You do not mention form of operations overseas, if subsidiaries where are they registered?

Either way there is a degree of complexity within the operations (foreign taxes/payrolls/employment law/ land ownership(?) to name just a few) which would make the audit slightly daunting.

What sort/ size of firm has been doing the audit up to now?

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By undecided
10th Feb 2015 13:13

Dear all

 

Most are subsidiary acquisitions which have local auditors.

Just debating whether there are any efficiencies in using one firm (Big4) or whether to continue with present arrangements.

Think I will stick with current arrangements due to bad press of Big4

 

 

 

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Replying to Wanderer:
paddle steamer
By DJKL
10th Feb 2015 13:36

Life goes beyond Big 4

undecided wrote:

Dear all

 

Most are subsidiary acquisitions which have local auditors.

Just debating whether there are any efficiencies in using one firm (Big4) or whether to continue with present arrangements.

Think I will stick with current arrangements due to bad press of Big4

 

 

 

 

Would not think you would need to go as large as Big 4 for overseas representations, firms further down the "rankings" will have their overseas connections.

In the 1980s ,whilst with Hodgson Impey in the UK, they had representation in 50 countries  (Hodgson Landau Brands) and I got issued with the international directory (not that I ever needed it) listing these.

Something like their successor firm ,Baker Tilly, ought to have international representation.

Whilst having been out of audit for years I would have intuitively thought that having the different audit firms talking to each other might be helpful, especially as cross checking inter company balances/ transactions might well be a significant audit area, as well as all working to an agreed timetable, so using affiliated firms from the different countries would not do any harm and might certainly make the audit process more coordinated.  I recall during my training the local UK offices auditing various Nissan dealerships which were subsidiaries of Nissan UK and requiring to work to an agreed timetable/ and disclosure format re their reporting to our London office who were auditing the parent, this was complex enough without communicating with a different firm in a different country. 

IMHO you should start having a look at the tiers below Big 4.

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By Brend201
12th Feb 2015 10:09

If you needed them, you would know

You have shown no clear reason for moving to a Big 4 firm (or Fat 4 as they were referred to in my former Top 10 employer) yet you refer several times to low standards, complaints against partners and bad press.  On a less forgiving forum, people might suspect a troll.

I agree that, if your existing arrangement is inadequate for your requirements, the firms outside the Big 4 have good reputations, good systems, international connections and probably lower fees and would probably do a top quality job for your company.

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By Weald Accountant
12th Feb 2015 10:59

Only move if it provides a benefit

We are a £20m+ T/O company with foreign subsidiaries and are served perfectly well by a top 50 firm who are able to handle audit of a group consolidation as well as working with overseas auditors. They also provide tax & payroll services via other parts of their firm with appropriate firewalls in place.

If there is no requirement to use a big 4, or perhaps top 10 firm then I don’t see any reason why you should actively seek to move to one of these. Yes by all means put your audit out to tender to see if the service (and/or fees!) can be improved and include a big4 firm in this process to get a comparison, but unless there is a specific requirement just go with what works best for the business and its shareholders.

Just one thing to note though, which I think is highlighted by Brend201 above, you repeatedly say big 4 have low standards. I seriously doubt it is the case that big4 by default have low standards. There is a huge gulf in size (fee income & partners) between the big 4 and number 5. By sheer volume of work alone the big4 are bound to have a greater number of disciplinary hearings than other firms of the same ‘quality’. Also, as many of their clients are worldwide household names (who incidentally, the argument goes, are so complex that ONLY big4 are large enough to audit their worldwide operations), when things do go wrong they go wrong in a big way and we all hear about it in the national press.

When an audit firm in the 40-50 ranking mucks up an audit, do you get to hear about it? Does it make the national press? Not really, unless you seek out the story or avidly follow accountingweb.

Make a proper assessment of your needs, invite firms to tender and evaluate their offering sensibly. Don’t be led by the press alone.

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