Accounting's Big Four All Suffer Audit Clients Losses in 2003; Strafford Publication's Auditor-Trak: PricewaterhouseCoopers Lost Most Clients; KPMG Fewest.

Business Editors

ATLANTA--(BUSINESS WIRE)--Jan. 27, 2004

For the first time in at least a decade, in 2003 each of the accounting profession's biggest firms lost more public company audit clients than it acquired, according to an exclusive analysis by Atlanta-based Auditor-Trak (http://www.straffordpub.com/products/atr/).

PricewaterhouseCoopers suffered the biggest decline with a net loss of 91 audit clients. This shrinkage in PWC's client base reduced the firm's client revenue under audit by $46.4 billion and cut its client assets under audit by $543.0 billion.(a)

Among the Big Four firms, KPMG recorded the smallest decline in its audit client base with a net loss of 51 companies (and enjoyed a net gain of $59.7 billion in combined client revenue audited but a net loss of $17.3 billion in assets).

Ernst & Young finished 2003 with 76 fewer audit clients (a decline of $24.5 billion in client revenue audited but an increase of $150.9 billion in assets) and Deloitte & Touche had a net loss of 65 clients (audited client revenue down $45.6 billion, assets up $394.9 billion).

"After the rapid growth of the Big Four's audit client lists in the wake of the 2002 collapse of Andersen, we expected 2003 would be a year of rationalization of their client bases -- and that has clearly taken place. Also, we expected to see increased client selectivity on the part of the firms in light of the new Sarbanes-Oxley environment. However, these circumstances alone do not seem to fully explain the extent of these client losses," said Richard Ossoff, publisher of Auditor-Trak (http://www.straffordpub.com/products/atr/).

Smaller national firms -- Grant Thornton, BDO Seidman and McGladrey & Pullen - collectively acquired 21% of the clients lost by their Big Four competitors, according to Auditor-Trak's exclusive analysis. Significantly, 34% of the public companies that formerly used a Big Four auditor opted for a regional or local firm as a replacement.

Prominent new audit clients acquired by KPMG last year include Sprint Corp. and AutoNation Inc. Deloitte & Touche added Royal Bank of Canada and its U.S. unit, RBC Centura Banks. Ernst & Young brought U.S. Bancorp and Clorox Co. into its client portfolio, while PricewaterhouseCoopers

was hired by Calpine Corp. and Carnival PLC.

On the negative side of the ledger, KPMG lost Neuberger Berman Inc. and Spiegel Inc. Deloitte & Touche lost Denny's Corp. and CITGO Petroleum Corp., Ernst & Young departed from the American Skandia Life Assurance Corp. and Steak n Shake Co. engagements, and PricewaterhouseCoopers lost Kmart and Pharmacia Corp.

Reporters interested in using further Auditor-Trak analysis in their stories can contact Executive Editor Jon McKenna at [phone] ext. 38, [e-mail].

Auditor-Trak will shortly publish an analysis considering the Sarbanes-Oxley Act's impact on changes in the quality of each Big Four firm's client base.

Auditor-Trak's exclusive ratings and records of more than 12,000 auditor changes are published by Atlanta-based Strafford Publications, Inc. For further details about an Auditor-Trak site license, visit (http://www.straffordpub.com/products/atr/) or call [phone] ext. 20.

(a) (Auditor-Trak considers revenue for most public company audit clients but assets for certain financial services and other investment-oriented companies.)

Strafford Publications, Inc. (http://www.straffordpub.com) is a leading publisher of specialized professional briefings and information services for attorneys and senior corporate executives, as well as extensive experience serving the public accounting profession.