Tuesday 13 October 2020 3:48 pm

BDO becomes largest auditor of listed UK firms

BDO is facing questions from an activist investor over its audit of Home REIT

Challenger firm BDO now audits the highest number of listed UK companies as attempts to reform the sector sees companies move away from the Big Four.

BDO, the UK’s fifth-largest accounting firm by revenue, gained 36 listed clients in the 12 months to October, according to Adviser Rankings, which collects auditor data.

It now audits 310 London-listed firms, up from 274 in the previous year, just ahead of PwC’s 307, which has 46 fewer clients compared with this time last year. Recent appointments include Oxford Instruments, Foxtons, Wincanton and Ted Baker.

Scott Knight, head of audit at BDO said: “Many tenders have been deferred this year due to pandemic-induced disruption, but we’re confident the market will continue to move in the current direction throughout 2021 as companies seek more choice and invest in quality.:

The mid-tier firm is well-established within London’s Aim market but the recent rankings show an increased demand among FTSE Small cap firms, which are leading the charge to appoint challenger firms.

It marks the first time a firm outside of the Big Four has held the top spot, pointing to a significant shift in boardroom attitudes.

BDO has benefited from changes at its top four rivals, which have raised fees and turned their back on risky clients as the regulator ramps up scrutiny.

Carillion’s collapse in 2018, on KPMG’s watch, prompted calls from politicians to break up the Big Four.

Failures by the firms have continued to appear including most recently with the high-profile collapse of Wirecard as a result of accounting fraud. It had been audited by EY for a number of years.

Earlier this year the Financial Reporting Council told the firms they have until 2024 to operationally separate their auditing sections, following repeated scandals within the industry.

Last month Deloitte announced plans to set yup an audit governance board, making it first of the Big Four firms to make headway with the regulators’ demands.

However Adviser Rankings’ firms shows that while BDO is gaining ground with small cap firms, the Big Four still has a monopoly over the FTSE 100.

KPMG holds the top spot for FTSE 100 firms with 29 clients, followed by Deloitte and EY on 24 and PwC with 23.