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Update on public company auditing in Canada

There’s some interesting Canadian audit industry data in the March 2007 CA Magazine.

In an earlier post I revealed my ignorance when it comes to public company auditing in Canada. I was incredulous that the small, one-office accounting firm could attract large, public company audits, simply because the perception in industry is that only a Big 4 firm has the necessary expertise.

Apparently that is simply not the case, and my eyes have been opened to the true situation. From the short article:

Another interesting finding, not shown in the chart, is that the number of firms auditing companies listed on Canadian exchanges has dropped to 236 in 2006 from 307 in 2005, a decrease of 23%.

236 different firms have public company clients in Canada? That’s quite a lot! And 307 in the prior year?

What is really driving this spread is the market capitalization of the public companies. There’s a chart (referred to in the quote) that shows that the Big 4 overwhelming audit the public companies with substantial market caps.

So the smaller public companies tend to choose the smaller firms. That makes sense.

Either way, lesson learned on my part.