Two thirds of FTSE 100 CFOs ex Big Four audit firms
Despite increased scrutiny, there is still an inextricable link between the boards of the FTSE 100 and the UK’s Big Four audit firms with almost two thirds of FTSE 100 CFOs and audit committee chairs being former partners or staff, according to Accountancy’s annual FTSE 100 and Big Four alumni survey
10 Dec 2018
According to Accountancy’s latest analysis of the FTSE 100 boardrooms, the giants of the auditing marked have achieved an oligopoly - not only in the supply of audit services, but on the demand side of the market, with almost two thirds of the FTSE 100’s CFOs and audit committee chairs being former partners or staff. By contrast, none of the mid-tier firms such as Grant Thornton or BDO have any claim on these positions - no CFOs or audit committee chairs are an alumni of these firms.
64 audit committee chair positions are filled by someone who has passed through the doors of at least one of the Big Four or Arthur Andersen, the ‘Big Five’ firm that was broken up and absorbed in the wake of the Enron scandal in 2002.
Despite increasing scrutiny, the number of Big Four alumni who serve as board chairs has hardly changed. There are still 12 FTSE board chairs with links to Deloitte, PwC, EY or KPMG, and there are now slightly more audit committee chair alumni compared to last year’s survey. The only area to see a decrease is in the number of board chairs, which numbered 15 in 2017 compared to just 12 today.
PwC currently takes the lead, with 22 alumni as audit committee chairs, 26 CFOs and four board chairs. In second place is KPMG, the smallest of the Big Four, with 19 audit committee chairs, 10 CFOs and four chairs. Third is Deloitte with six audit committee chairs, nine CFOs and one chair, followed by EY with 13 audit committee chairs, nine CFOs and two chairs. Interestingly, Arthur Andersen’s name continues to crop up in the CVs of 11 CFOs, though only in five audit committee chairs and just one chair.
Additionally, the Big Four, and indeed many of the mid-tier firms, run extensive alumni programmes that allow them to keep in touch with individuals who may have left the firm, perhaps many years previously. The firms clearly see that it is worth their while to invest in such programmes and that there can be a good return on this investment.