In a Wall Street Journal exclusive last week, journalist Mark Maurer reported that EY has experienced significant losses in its U.S. public-company audit clients, shedding 84 since January 2023 — far more than its Big Four peers.
This loss, partly by design, is aimed at revamping its audit practices and improving audit quality following regulatory findings of increased deficiencies. The firm's audit shortfall rate surged to 46% in 2021, prompting EY to simplify its audit approach and focus on standardizing procedures. As part of its transformation, EY has invested $1 billion over three years to enhance its audit and tax platforms with AI and improve training.
The firm's client departures have resulted in a loss of $215 million in audit fees, significantly impacting its market share, which remains flat compared to its peers. "Market share is important but not as important as transforming our audit practice and driving higher quality audits," said Dante D'Egidio, Vice Chair for Assurance at EY Americas.
Despite these efforts, EY continues to face challenges, including recent client-reported issues during PCAOB inspections. Although EY's audit deficiency rate fell to 37% in the latest inspections, it remains the highest among the Big Four. And, in comparison to EY's net loss of 63 clients since the start of 2023, Deloitte, KPMG, and PwC have netted an additional 46, 13, and four clients, respectively.
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