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November 1, 2022

Shifts in AIM’s Advisers auditors ranking guide

AIM’s Advisers Rankings has registered a series of industry shifts in its most recent auditors ranking guide. London-based PKF Littlejohn registered the highest number of new clients on the ranking, growing from 77 in July 2022 to a total of 83 in October. The firm has also successfully secured the lead in the Basic Materials sector on a standalone basis.

PFK Littlejohn’s performance came to affect BDO in the overall ranking, leaving it with a slightly diminished numerical advantage. This comes after the firm highlighted a series of issues of “serious concern” pertaining to its audit of Revolution Beauty, an online cosmetics retailer. BDO did not sign off on the company’s preliminary 2022 figures given Revolution Beauty’s failure at supplying complete and accurate evidence to the firm. This prudent approach to the practice is to be perceived favourably by regulators, especially given the execution of three independent reviews issued by the Secretary of State into audit regulation and the scope of the audit process over the past few years.

This point has clearly become relevant in the industry in the recent past, as made evident by EY’s decision to go through with their plans to separate the audit and advisory businesses within the group. Partners in the firm expect this to restore faith in the independence of their auditing services. These plans are still to be approved by the group’s partners around the world, and if they were to take on this move, they would theoretically eliminate both conflicts of interest and operational challenges. Despite of this, EY has fallen one place onto the 11th place on the ranking.

Several other firms, including Crowe, Saffery Champness, Cooper Parry Group, MHA MacIntyre Hudson, Moore Kingston Smith, CLA Evelyn Partners, and Kreston Reeves all saw improvements in terms of their performance on the ranking.

The Consumer Discretionary and Consumer Staples rankings published by AIM were characterised by a lack of major changes. According to AIM’s report, “it’s unlikely that this reflects the ongoing slump in consumer confidence – worsened by a sharp deterioration in homeowners’ attitudes towards their house values – but you can’t rule it out”. Similarly, the energy sector came to be characterised by a slump, with PKF Littlejohn narrowing the advantage of frontrunner BDO, a move facilitated by the addition of sector constituents Block Energy and Pantheon Resources.

On the Financials and Real Estate sector, PwC secured a third place thanks to a new advisory arrangement with City of London Group, while PKF Littlejohn kept its second place despite the fact it now provides audit services for Kingswood Holdings Ltd. The Health Care sector saw a high degree of contestation on the ranking, as made evident by the performance enjoyed by both RSM UK Audit and CLA Evelyn Partners.

The report came to portray the rise of firms such as PKF Littlejohn in terms of performance, while also displaying an apparent slump or slowdown in certain sectors.

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