CGI to replace EY with PwC as its next auditor

22 October 2018 2 min. read
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Montreal-based tech consultancy CGI has chosen Big Four accounting and consulting firm PwC to replace previous auditor EY. The decision flows from the best-practice of periodically rotating auditors, regardless of performance.

CGI announced that its Board of Directors will recommend that PwC perform auditing services for the fiscal year ending Sept. 30, 2019. The recommendation came as the result of the firm’s rigorous selection process supervised by CGI’s Audit and Risk Management Committee. The routine recommendation will likely be confirmed by shareholders at the company’s Annual Meeting in January.

"Ernst & Young have always acted independently and collaboratively. We appreciated their professionalism and contribution over the past several years," said François Boulanger, Executive Vice-President and Chief Financial Officer, CGI. "The recommendation to appoint a new auditor is in line with global best practices to periodically rotate this function, ensuring the continuity of independence and transparency for our shareholders."CGI to replace EY with PwC as its next auditorThis is no skin off the back of EY, who will pick up another large client as corporate giants periodically shuffle auditing chairs between the Big Four oligopoly of Deloitte, KPMG, PwC, and EY. Between them, the Big Four audit over 99% of S&P 500 companies. When other accountancies describe themselves as focusing on the middle-market, it’s because they have little choice – crowded out as they are by the dominance of the Big Four among the largest public clients.

Among the S&P 500, firms stay with a single auditor for an average of 16-23 years, though a number have 100+ year relationships with their Big Four auditor. For example, Deloitte has audited Procter & Gamble and Dow Chemical for over a hundred years; PwC has audited United States Steel for 114 years; KPMG has been with General Electric for 108 years; and EY has audited GATX for over a century.

Meanwhile, the Big Four audit 98% of the FTSE 350 in the UK, a situation which has led Grant Thornton to give up trying to bid on FTSE 350 audits. The UK introduced legislation in 2016 which forces public companies to tender auditing contracts every 10 years and to change auditors every 20 years. The move has led to little change in the monopoly conditions of public company auditing, and has seen British regulators call for a splitting of the Big Four to create audit-only firms.