BT study of all listed companies shows Big 4 still rule but smaller firms carve niches
(SINGAPORE) Ernst & Young are the runaway leaders when it comes to auditing Singapore-listed companies, the Big Four accounting firms still have a stranglehold on the space while a lesser-known firm is a favourite with Chinese firms or S-chips.
These facts emerged in a BT study of every single one of 764 SGX-listed companies here, based on their annual reports and SGX announcements.
The Big Four clearly rule, accounting for 497 of the 764 listed companies.
Ernst & Young, with 191 clients, are comfortably ahead of the pack, leaving KPMG a distant second with 117 clients. Deloitte came in third place with 108 clients while PricewaterhouseCoopers (PwC) global network engages 81 listed clients here.
The domination of the Big Four was even more pronounced in the blue chip space as they were engaged by 29 of the 30 Straits Times Index companies. PricewaterhouseCoopers and Ernst & Young had nine STI clients each while KPMG has eight. Deloitte trailed its peers, with only three STI clients.
In fact, only one STI company, Golden Agri-Resources, has chosen to be audited by an audit firm outside the Big Four - Moore Stephens LLP.
The S-chips space threw up a completely different scenario with Grant Thornton member firms carving out a niche for themselves.
Between them, Foo Kon Tan Grant Thornton and Grant Thornton Hong Kong account for 37 of the 149 S-chips here - about a quarter of the pie. Some 25 of Grant Thornton Hong Kong’s 26 clients are S-chips while Singapore-based Foo Kon Tan Grant Thornton has 12 S-chip clients out of its total of 33.
Despite its engagement with beleaguered firms Beauty China Holdings and China Printing & Dyeing Holding, the audit firm is undaunted by the slew of scandals surrounding the S-chip sector.
A spokesperson for Foo Kon Tan Grant Thornton told BT that the firm only undertakes or continues engagements after considering the integrity of the client, its own resources and skills, and ethical requirements.
Next in line in the S-chip space is Deloitte, followed by Ernst & Young by virtue of being the reporting auditors for a sizeable number of Chinese IPOs.
‘We don’t have a specific guideline on the market size. In fact, we still provide services to SMEs, and we don’t say they are too small for us,’ said Cheung Pui Yuen, head of audit at Deloitte & Touche LLP.
Some auditing firms have found a sweet spot in certain sectors. Grant Thornton member firms, for instance, audit mostly consumer and retail companies while KPMG has a knack for Reits, business trusts and property firms.
Tham Sai Choy, regional head of audit at KPMG LLP said it is part of the firm’s group strategy to grow with new industry sectors here. ‘We have the lion’s share of audits in the property sector because of the depth of resources we have in this sector.’
All three local banks and telcos engage auditors different from their peers. Deloitte & Touche LLP audits SingTel, Ernst & Young LLP audits United Overseas Bank and MobileOne, KPMG audits OCBC and StarHub, and PwC audits DBS Group.
Smaller accounting outfits, however, have to consider if their resources measure up to the amount of work required.
‘We need to ensure we have the resources and knowledge on the sector that we audit, otherwise the risk will be high,’ said Henry Tan, managing director of Nexia TS Public Accounting.
The extra caution and procedures in carrying out the audit has translated to higher costs and more time being incurred, auditors say. Fees have gone up by as much as 10 per cent this year, according to some sources.
‘But generally, any fee increase should be reasonable as our clients have also been affected by the global financial crisis,’ said PKF-CAP head of audit Michael Chin.
PwC LLP Singapore Assurance Leader Yeoh Oon Jin noted that ‘heightened vigilance has led to a number of audit qualifications and disclaimers for some of its clients.’ Among them is China Sun, where PwC uncovered missing cash and unconfirmed receivables.
Though auditors do not automatically decline engagement with clients that have a qualified audit opinion in their last financial report, they are assessing the risks pegged to this.
‘We would consider all the circumstances, including of disagreements between the company and its auditors, in deciding whether we can discharge our duties professionally if we were to be auditors,’ said Mr. Tham.
But those with higher appetite for risks may still decide to take them on.
Baker Tilly, for instance, had earlier taken on New Lakeside though it was not given a clean bill of health by its previous auditors. It is now stepping down after a lack of agreement on audit fees and after a qualified opinion on New Lakeside’s consolidated financial statements for the 18-month period ended June 30, 2008.
PKF-CAP also recently agreed to take up appointment at NEL Group despite a public disagreement between NEL and its former auditors.
S-chips are not being given the cold shoulder either.
‘We are not more wary or shunning S-chips,’ said Neo Keng Jin, audit partner at Moore Stephens, one-third of whose Singapore-listed clients are S-chips. ‘The audit of S-chips requires a modified approach which we have adopted from the very beginning.’
Moore Stephens was external auditors at China Energy that flagged an additional payment for an acquisition last year. It has also made a disclaimer for the FY08 results of Bio-Treat and Guangzhao Industrial Forest Biotechnology Group.
Baker Tilly TFWLCL managing partner Foong Daw Ching noted that S-chips that have fallen in the bad light are the minority. ‘Troubled firms still need to be audited anyway,’ he said.
Additional reporting by Victor Philip Katheyas and Jessica Yeo
2 comments:
Auditor landscape gets more varied
Lynette Khoo
20 May 2009
BT study of all listed companies shows Big 4 still rule but smaller firms carve niches
(SINGAPORE) Ernst & Young are the runaway leaders when it comes to auditing Singapore-listed companies, the Big Four accounting firms still have a stranglehold on the space while a lesser-known firm is a favourite with Chinese firms or S-chips.
These facts emerged in a BT study of every single one of 764 SGX-listed companies here, based on their annual reports and SGX announcements.
The Big Four clearly rule, accounting for 497 of the 764 listed companies.
Ernst & Young, with 191 clients, are comfortably ahead of the pack, leaving KPMG a distant second with 117 clients. Deloitte came in third place with 108 clients while PricewaterhouseCoopers (PwC) global network engages 81 listed clients here.
The domination of the Big Four was even more pronounced in the blue chip space as they were engaged by 29 of the 30 Straits Times Index companies. PricewaterhouseCoopers and Ernst & Young had nine STI clients each while KPMG has eight. Deloitte trailed its peers, with only three STI clients.
In fact, only one STI company, Golden Agri-Resources, has chosen to be audited by an audit firm outside the Big Four - Moore Stephens LLP.
The S-chips space threw up a completely different scenario with Grant Thornton member firms carving out a niche for themselves.
Between them, Foo Kon Tan Grant Thornton and Grant Thornton Hong Kong account for 37 of the 149 S-chips here - about a quarter of the pie. Some 25 of Grant Thornton Hong Kong’s 26 clients are S-chips while Singapore-based Foo Kon Tan Grant Thornton has 12 S-chip clients out of its total of 33.
Despite its engagement with beleaguered firms Beauty China Holdings and China Printing & Dyeing Holding, the audit firm is undaunted by the slew of scandals surrounding the S-chip sector.
A spokesperson for Foo Kon Tan Grant Thornton told BT that the firm only undertakes or continues engagements after considering the integrity of the client, its own resources and skills, and ethical requirements.
Next in line in the S-chip space is Deloitte, followed by Ernst & Young by virtue of being the reporting auditors for a sizeable number of Chinese IPOs.
‘We don’t have a specific guideline on the market size. In fact, we still provide services to SMEs, and we don’t say they are too small for us,’ said Cheung Pui Yuen, head of audit at Deloitte & Touche LLP.
Some auditing firms have found a sweet spot in certain sectors. Grant Thornton member firms, for instance, audit mostly consumer and retail companies while KPMG has a knack for Reits, business trusts and property firms.
Tham Sai Choy, regional head of audit at KPMG LLP said it is part of the firm’s group strategy to grow with new industry sectors here. ‘We have the lion’s share of audits in the property sector because of the depth of resources we have in this sector.’
All three local banks and telcos engage auditors different from their peers. Deloitte & Touche LLP audits SingTel, Ernst & Young LLP audits United Overseas Bank and MobileOne, KPMG audits OCBC and StarHub, and PwC audits DBS Group.
Smaller accounting outfits, however, have to consider if their resources measure up to the amount of work required.
‘We need to ensure we have the resources and knowledge on the sector that we audit, otherwise the risk will be high,’ said Henry Tan, managing director of Nexia TS Public Accounting.
The extra caution and procedures in carrying out the audit has translated to higher costs and more time being incurred, auditors say. Fees have gone up by as much as 10 per cent this year, according to some sources.
‘But generally, any fee increase should be reasonable as our clients have also been affected by the global financial crisis,’ said PKF-CAP head of audit Michael Chin.
PwC LLP Singapore Assurance Leader Yeoh Oon Jin noted that ‘heightened vigilance has led to a number of audit qualifications and disclaimers for some of its clients.’ Among them is China Sun, where PwC uncovered missing cash and unconfirmed receivables.
Though auditors do not automatically decline engagement with clients that have a qualified audit opinion in their last financial report, they are assessing the risks pegged to this.
‘We would consider all the circumstances, including of disagreements between the company and its auditors, in deciding whether we can discharge our duties professionally if we were to be auditors,’ said Mr. Tham.
But those with higher appetite for risks may still decide to take them on.
Baker Tilly, for instance, had earlier taken on New Lakeside though it was not given a clean bill of health by its previous auditors. It is now stepping down after a lack of agreement on audit fees and after a qualified opinion on New Lakeside’s consolidated financial statements for the 18-month period ended June 30, 2008.
PKF-CAP also recently agreed to take up appointment at NEL Group despite a public disagreement between NEL and its former auditors.
S-chips are not being given the cold shoulder either.
‘We are not more wary or shunning S-chips,’ said Neo Keng Jin, audit partner at Moore Stephens, one-third of whose Singapore-listed clients are S-chips. ‘The audit of S-chips requires a modified approach which we have adopted from the very beginning.’
Moore Stephens was external auditors at China Energy that flagged an additional payment for an acquisition last year. It has also made a disclaimer for the FY08 results of Bio-Treat and Guangzhao Industrial Forest Biotechnology Group.
Baker Tilly TFWLCL managing partner Foong Daw Ching noted that S-chips that have fallen in the bad light are the minority. ‘Troubled firms still need to be audited anyway,’ he said.
Additional reporting by Victor Philip Katheyas and Jessica Yeo
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