The world has changed. Do you still need the Big Four brand?
I began my career at a Big Eight accounting firm (yes, I know I’m dating myself), and so did many of my partners. We each decided, a number of years ago, that we didn’t need the Big Firm name anymore. Since then, many Big Four clients have decided they no longer need the Big Brand either.
Do you still need the Big Four brand on your audit?
Some things have changed.
We used to think that companies with global reach needed a Big Four firm. That’s not so true anymore. Unless you have extensive, ongoing operations all over the globe, you can be well-served by a strong regional firm that’s close to your headquarters. Many firms belong to international networks, and have affiliates worldwide.
We used to think that complex organizations or those subject to substantial regulation needed a Big Four firm. But top-tier regional firms are just as likely to stay on top of the newest standards and the more obscure regulations. There’s more data at our fingertips than ever before, and firms that commit to their people and invest in training and development are just as capable as the Big firms today.
We used to think that companies with big institutional investors, or in the process of raising capital needed the prestige of the Big Four brand. Today, 100% clean PCAOB inspections and decades of clean peer reviews may be just as compelling.
Companies who have no pressure from shareholders or Board members to review and lower costs in every area may be more comfortable staying with their Big Four auditors. If expense control is a priority of management, Board or investors, a top regional CPA firm typically has lower fees.
Assess candidates carefully.
If you’re considering a change to a top-tier regional, use these guidelines in assessing potential auditor candidates.
- One of the benefits can be quicker and more frequent access to top management if issues arise, but that’s not true for every firm. Get a sense of their structure and communication methods. References should be able to help you assess this factor.
- Make sure they have strong technical credentials. Check PCAOB online, and ask for copies of their last three peer reviews.
- If one of your pet peeves about the Big Four is the fresh, inexperienced talent they send your way each year, one benefit of a regional firm is they’re not hiring staff in bulk. You’re more likely to get a high quality, experienced team that you don’t have to baby-sit. Consider reviewing the budget for the audit, showing the number of hours at each staff level.
- If you suffer when you have to teach a new team your business each year, ask about turnover. Some regional firms have lower turnover than others. Ask references about this one.
- If one of your goals is a lower fee, make sure they don’t nickel and dime you – get a a fee commitment that addresses how expenses and any unforeseen issues will be handled.
I didn’t need the Big Firm name anymore, and I’ve never regretted my decision. How about you?