Clients Audit the Big 4

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2 Clients Audit the Big 4 Clients Audit the Big 4 All too often, people executives, job hunters, the media and, yes, auditors themselves collectively refer to the Big 4 as a single entity. Together, they dominate the CPA world, their individual brands subsumed by their reputation as a whole. Yet, like the superhero team The Fantastic Four, each individual member of the Big 4 has a real set of strengths and weaknesses their superpowers and their vulnerabilities. For those less familiar with the Big 4, these unique qualities may be invisible much like the names of the individual members of The Fantastic Four are not likely to roll off the tongue. Yet to those most intimate with the Big 4 firms their clients these distinct characteristics burst forth with clarity and precision. What Clients Say Make Each of the Big 4 Unique PwC delivers practical perfection with an unwavering commitment to help Deloitte embodies a client centric approach to drive the greatest value Ernst & Young deftly maneuvers through problems with exceptional technical skills KPMG offers a quality, no frills solution 1

3 Audit World Not So Staid The distinct qualities clients recognize in CPA firms are not limited to their own primary auditors. In fact, many clients are applauding the remarkable qualities of firms other than their own primary audit firm. This phenomena underscores 4 fundamental truths about the accounting industry: 1. 4 out of 10 primary audit relationships are vulnerable More specifically, BTI s research reveals just 60.2% of Controllers and CFOs recommend their primary audit firm when presented with an open ended request for a recommendation % of clients are in the process of changing their audit firm Of the 39.8% of clients who don t recommend their primary audit firm unprompted, a whopping 1 of 3 are actively looking to switch CPA firms % of CFOs and Controllers see no stigma in switching audit firms The days of scandal and confrontation being the only acceptable reason to hire a new audit firm are not quite gone but they re on their way out according to more than 70% of clients 4. Nearly 9 out of 10 clients of a Big 4 firm use at least one other Big 4 firm While SEC regulations prevent these competitors from directly encroaching on audit work, the presence of these worthy peers creates strategic disruption, offering a daily reminder to clients of how their audit firm stacks up to the competition 2

4 Table of Contents for the Full Version of The BTI Client Service Scorecard 1 How Clients Use CPA Firms: Switching Lanes and the Road to Clientopia 4 Getting to Clientopia: The 17 Activities Paving the Way to Ideal Client Relationships 8 Superior Financial Rewards Activities: The Best of the Big 4 15 Price of Admission Activities: Minimum Requirements 16 Bolster the Case for a Superior Relationship 17 Calling Card Activities: Proven to Attract Clients 18 Understanding Clients 20 Top Financial Executive Goals for Major Changes Being Made by Financial Leaders 22 Client Spending and Budget Expectations 29 Market Presence and Branding 39 About BTI 46 3

5 How Clients Use CPA Firms: Switching Lanes and the Road to Clientopia 4

6 A Single Primary Audit Firm Competes with at Least One Other Big 4 and One National or Local Firm How many CPA firms does your company work with today? Large organizations rely on 3 CPA firms, on average 87.5% use at least one other Big 4 firm in a substantive manner 3 CPA Firm Usage Average Number of Firms Used 4 in 10 CFOs and Controllers do not recommend their primary CPA firm see page 6 The 2+ CPA firms in your client base are strategic disruptors Clients compare you every day to these firms whether or not they are considering replacing your firm Value delivered Communications styles Organizational efficiency 0 Primary Audit Firm Secondary Firms Personal outreach and connection Even whether you remember their kids names or not 5

7 60% of Clients Satisfied Which CPA firms do you consider your primary providers? Could you tell me which firm or firms you would unequivocally recommend to someone else in your industry? 60.2% of Controllers and CFOs who use a Big 4 firm recommend their current auditor in response to an open ended request These clients are truly satisfied they are in Clientopia Clients in a state of Clientopia are 68.2% less likely to replace their audit firm Clientopia clients rate the client service performance of their CPA firms 18.8% higher than do those who are less satisfied 100% 75% 50% Client Satisfaction with Primary Auditors Percent of Decision Makers 60.2% Clientopia 25% 39.8% Vulnerable 0% 6

8 About BTI 7

9 About BTI BTI is the leading provider of strategic research to professional services firms. For the past 21 years BTI has delivered the most insightful and compelling custom client surveys, syndicated client surveys, strategic market research, benchmarking and best practice studies relating to client service, business development, business strategy and client satisfaction. BTI works with virtually every market leader in major professions including: Law Accounting Engineering Management Consulting Technology Consulting Economic Consulting Environmental Consulting Private Equity BTI conceived, designed and developed the largest continuous benchmarking survey of how C level executives select and evaluate professional services firms. This research includes more than 9,000 one on one interviews with C level executives, probing all aspects of client relationships and client expectations. BTI used this research to define the 17 Activities Driving Clientopia.. 8

10 BTI s Research with Financial Executives Over the past 21 years, BTI conducted more than 9,000 in depth one on one interviews with C level executives to delineate the activities, qualities, characteristics and behaviors driving successful client relationships. These C level executives identified 17 activities as the most important and influential in assessing their professional service firms. This exclusive study adds 243 brand new, in depth interviews with CFOs, CAOs and Controllers to our expansive database. These financial leaders, from the world s largest and most influential buyers of audit services, participated in individual telephone interviews between August 25, 2009 and December 20, 2010 and represent: Organizations with an average revenue of $2.4 billion Financial executives, including: Chief Accounting Officers (CAO) Chief Financial Officers (CFO) Controllers Senior Vice Presidents/Vice Presidents of Finance Companies spanning more than 10 industries, including: Banking & Financial Services Biotech & Pharmaceutical Consumer Goods Energy & Utilities High Tech Manufacturing 9

11 Research Methodology and Approach BTI conducts all interviews using multiple techniques. These include: Structured questions Quantitative questions Our interview team averages more than 15 years experience interviewing C level and top executives. Terms of Use This copy of is licensed to you for private, non commercial use for internal, company purposes. No portion of this information may be copied or transmitted in any form, shape or manner without the prior written consent of The BTI Consulting Group, Inc., of Wellesley, MA. Any violation of this license may be punishable by applicable federal statutes and subject the user to additional and compensatory licensing fees. Copyright 2011, The BTI Consulting Group, Inc. Address any questions to: The BTI Consulting Group, Inc. 396 Washington Street Suite 314 Wellesley, MA Forward looking questions Experience based questions 10

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