In Charts: How Big Are The Big 4 In India
They’re known as the Big 4 of the accounting world for a reason: they continue to be the auditors for six out of every ten of the top 500 listed firms in India.
KPMG, EY, Deloitte and Pricewaterhouse will handle the audits of 283 companies in the Nifty 500 index for 2019-20, according to a joint report by NSE and Prime Database Group. Even in the broader universe of all listed firms on the NSE, the Big 4 are auditors for 26 percent of the 1,813 companies.
While that figure is slightly lower than that of the previous fiscal—28 percent—it only underscores how the four global audit giants have grabbed the lion’s share of India’s audit business within over a decade and a half. The dominance of the Big 4 has triggered concerns globally saying that the auditing world can become much more resilient by breaking down their monopoly.
It’s not just the number of companies they audit, but also their size. Their clients include some of the most valued firms in India. The market value of the companies audited by the Big 4 in India is 60 percent of the total market capitalisation of all companies listed on the NSE. KPMG leads the pack with almost 23 percent.
Naturally, this also makes them the highest earners in the audit business. The Big 4 took home 30 percent of the overall fees paid out by companies for audit and other services in 2018-19. While KPMG audited more companies than the rest, EY received the highest fees on a standalone basis.
Waning Dominance Of Pricewaterhouse?
One of the Big 4 firms, however, lost its spot in terms of the number of companies audited and their market value.
Pricewaterhouse slipped out of the top four and was replaced by Walker Chandiok & Co LLP, an affiliate of Grant Thornton. Pricewaterhouse is auditing 65 companies in 2019-20, compared with 72 companies in the prior fiscal. Walker Chandiok, on the other hand, has improved its tally to 66 companies from 63 earlier.
Even in terms of market capitalisation, the companies that Walker Chandiok is handling have 6.2 percent share in the total market cap of the listed universe. For Pricewaterhouse, the figure stands at 3.13 percent.
Earlier in the year, the Securities and Exchange Board of India had barred Price Waterhouse from auditing listed firms after finding one of its firms guilty of lapses in the accounting fraud at the erstwhile Satyam Computers Services Ltd.
However, in September the Securities Appellate Tribunal quashed the regulator’s two-year ban saying SEBI does not have the power to bar auditors. Later, the Supreme Court stayed the SAT’s order in November.
Walker Chandiok is also climbing on the highest earner chart, with the overall fees it got in 2018-19 growing 13.36 percent. This, at a time when the overall fees for Pricewaterhouse declined 1.86 percent during the same period.
Uptick In Auditor Resignations
The ongoing financial year will also have a higher number of auditor resignations. Already, 52 auditors had tendered their resignation before completing their tenure as on Dec. 23—higher than the 51 such instances in 2018-19.
The rise in mid-term resignations by statutory auditors had also prompted the Securities and Exchange Board of India to set out new rules for the process.
Who Paid The Most?
Banks paid significantly higher fees compared to non-banking companies. The 40 listed banks paid an overall fee of Rs 1,045 crore. That’s 55 percent of the total fee paid by all listed companies.