Deloitte has emerged as the dominant player in the UK law firm audit market, new research by The Lawyer has revealed.
Two-thirds of this year’s UK 200 top 30 firms are clients of Deloitte. The firm’s closest competitor in this group is Nexia Smith & Williamson, which in contrast to Deloitte’s 20 has just two clients (Clyde & Co and Macfarlanes).
Deloitte also has a stranglehold on the UK magic circle, auditing Clifford Chance, Freshfields Bruckhaus Deringer and Linklaters. Allen & Overy is the sole PricewaterhouseCoopers (PwC) client in this group.
“It’s a sector we invest heavily in, and have done for many years,” said Jeremy Black, a partner in Deloitte’s professional services practice. “As a result, we’ve been able to build a breadth and depth of expertise that allows us to better serve firms both here in the UK and globally. Our experience in the sector means we have tax and audit professionals in all the key international locations who have experience of serving law firms.”
The Lawyer examined the accounts for all of the 162 firms in this year’s UK 200 that have converted to LLP status and are therefore statutorily required to file year-end accounts and have their accounts audited.
While the largest firm in the UK 200 – DLA Piper – is audited by PwC, 20 of the UK top 30 are clients of Deloitte. In total Deloitte has 40 clients in this year’s UK 200, 26 ahead of BDO in second place.
Once outside the top 30 Deloitte’s dominance is significantly reduced, with a total of 47 accountancy firms auditing this year’s top 200.
Of those, 32 had just a single client. They include Ernst & Young and its sole audit client, Newcastle’s Watson Burton.
There is no place for either KPMG or Ernst & Young in the upper reaches of this year’s table, with the former’s highest-ranked client (Parabis) coming in at 34 and the latter having no clients in the top 100 at all, with only Watson Burton in 168th place turning to it for auditing services.
“Auditors look at businesses as going concerns,” said Nexia Smith & Williamson’s head of professional practices Giles Murphy. “They assess the ability of a business to function for the following 12 months. And what the last year or two has shown in spades is that the partnership model is fragile.”
For more, see this week’s cover story, Auditors under the spotlight.