Financial Accounting Blog

Thursday, June 17, 2004

Accounting gets bigger and smaller. The Atlanta Business Chronicle says that the requirements of Sarbanes-Oxley are causing changes in the size of accounting firms.

Under Sarbanes-Oxley,
-The lead audit partner and audit review partner working with a publicly traded company must be rotated every five years
-The Big Four accounting firms cannot mix the services they provided pre-Enron. As a result, the accounting firms are now back to their core duty, the actual audit.

These new requirements have resulted in mergers of smaller accounting firms because firms need more partners so that they can meet the required partner rotations on their publically traded audit clients.

The increased size of the Super Regional Firms allows more stature and they become more likely to grab some good business from the Big Four, especially as the economy comes back over the next few years.
"We're getting a lot of opportunities from the national firms because there is so much work to be done because of Sarbanes-Oxley," said John Davis, co-leader of the Dixon Hughes Atlanta office. " The national firms don't have enough people to do that work, so it's sending work our way. It's the typical work that CPA firms would do -- internal auditing and internal control assessments."