Second-Tier Accounting Firms Poised to Move Up
In light of the changes in the accounting profession in the last year, CFO.com weighs in this month with a special report about the current state of the industry. The report looks at how these changes have affected the second-tier, or Group B, accounting firms, such as Chicago-based Grant Thornton or Seattle-based Moss Adams.
The report explores the possibility of the Second Six, that is the six largest Group B firms, expanding into Big Four territory. Arthur Andersen’s demise opened the door slightly for the Second Six, which successfully grabbed some of the smaller firms that had been on Andersen’s roster.
Group B firms have also benefited from the Sarbanes-Oxley Act of 2002, which limits the nonauditing work that auditors can do for their clients. As a result, many large companies are hiring Second Six firms to do consulting work that the Big Four firms are prohibited from doing.
The report also points out potential problems for the Second Six, including higher liability insurance premiums. According to the article, Group B firms stand to lose existing audit clients because the high cost of increased regulation is causing some smaller public firms to go private.
Voice of the Editor
Which isn’t completely true. I mean, occasionally I drop by when I manage to sneak out of the nonstop frat party over at Going Concern, but I’m mostly a wallflower over there. I’m happy to say that I’ve been given express permission (or explicit orders, if you like) to wander over here to AccountingWEB more often.
Why is that, you might ask? My job is to replace the irreplaceable Gail Perry as Editor-in-Chief. What does that mean? I don’t really know! I think it’ll be fun getting a feel for things, throwing in my own thoughts here and there, and listening to the discussions you’re having about the accounting profession.