Thought Leadership: Audit

Choosing mid-size accounting firms over the BigFour for audits

The recent series of investigations into Big Four audits has triggered considerable discourse within the accounting industry around the optimum structure for delivering auditing services. Kreston Global’s Herbert M. Chain, Deputy Technical Director, Global Audit Group and Ricardo Gameroff, Kreston Global Audit Business Director comment. 

The main drivers of this trend towards mid-tier firms are regulatory and professional concerns over conflicts of interest, the need for greater competition in the marketplace, and the quality and nature of service delivery. We have seen companies seek out alternative audit service providers as auditors or joint auditors, resulting in growing appetite, and thus opportunity, for smaller networks to serve former Big Four clients.

Herbert M. Chain, Deputy Technical Director, Global Audit Group

Ricardo Gameroff, Partner Kreston ATC Chile and Kreston Global Audit Business Director

Why are Big Four audit clients switching to mid-tier international audit networks?

Companies have been transitioning from the dominant Big Four audit firms to mid-tier audit networks, such as Kreston Global, especially in the mid-market, which happens to be one of Kreston's critical target markets. This trend is attributed to several factors: 

More personalised service and greater attention to detail. Clients may perceive that they are overshadowed by larger clients at Big Four firms and may benefit more from more personalised service and attention to detail which mid-tier firms can provide. Mid-tier firms are more willing to invest time and effort in understanding their clients' businesses, providing tailored advice that meets their specific needs. 

Cost. Mid-tier firms tend to offer more cost-effective solutions, which could be attractive to clients seeking to reduce their audit fees. This may come at the expense of sacrificing some of the prestige associated with being audited by a Big Four firm. 

Regulatory pressures on the Big Four. The European Union and the United Kingdom have proposed measures that recommend or require auditor tender and/or rotation or aim to enable mid-tier audit firms to collaborate with the Big Four audit firms in a joint auditing arrangement. This proposal presents several advantages for these mid-tier firms, one of which is that it provides them with increased access to larger clients, allowing them to demonstrate their capabilities and expertise on a broader platform. Additionally, the use of joint auditing could play a crucial role in dismantling the long-standing oligopolistic nature of the audit market that the Big Four have dominated. By becoming joint auditors with larger firms, mid-tier firms would develop expertise they might not have had prior to the engagement and thus be better placed to compete with the larger firms in the industry. 

Perceived Quality of Service. The Big Four audit firms have been under mounting pressure to enhance the quality of their audits, primarily due to the fallout from prominent audit failures. Consequently, some clients contend that mid-tier audit firms may provide more bespoke and specialised services that enable a more profound understanding of the clients' businesses and operations. This understanding, in turn, leads to a more custom-tailored and all-encompassing audit approach that tackles the specifics risks and challenges encountered by the client. Mid-tier audit firms' ability to provide personalised and customised services is attributed to their willingness to devote ample time and resources to building deep relationships with clients and learning their businesses' intricacies, a feat that may be challenging for larger firms with a more extensive clientele base.

Challenges faced by mid-tier international audit networks when competing with the Big Four

Despite the trend of clients shifting away from the Big Four audit firms, it is essential to recognise that the Big Four still maintain their dominance in the audit service market, particularly for large, multinational clients. Mid-tier international audit networks face several challenges when competing with the Big Four audit firms, some of which are as follows: 

Brand recognition. The Big Four audit firms have cemented their status as the most prominent and reputable names in the accounting industry. As a result, mid-tier audit firms are faced with a significant challenge in achieving comparable levels of brand recognition and reputation, making it more difficult to attract new clients.  

Resources. The Big Four audit firms possess considerable resources, including a large workforce of professionals, advanced technological and research capabilities, and extensive training and development programs. In contrast, mid-tier audit firms struggle to match the same level of resources and expertise that the Big Four can offer. 

Global reach. The Big Four audit firms boast a robust global presence with established networks of member firms scattered throughout the world. Mid-tier audit firms find it challenging to challenge the expansive global reach and comprehensive coverage of the Big Four, which could limit their ability to effectively serve clients with complex international operations. 

Global consistency of service. The Big Four accounting firms possess a vast and diverse pool of resources and specialised expertise, which they dedicate to delivering consistent and high-quality audit services across multiple jurisdictions worldwide. Mid-tier audit networks, however, lack the same level of resources and specialised expertise, which can lead multinational companies to perceive the level of service across the globe as inconsistent.  

Regulatory oversight. The Big Four are subject to greater regulatory oversight due to their size and global presence. As a result, they tend to have more robust compliance programmes and greater resources dedicated to monitoring and enforcing regulatory compliance, which can provide clients with a greater sense of security and confidence. 

Talent acquisition and retention. The Big Four are highly regarded employers and have a reputation for providing extensive training and development programs. This can make it more difficult for mid-tier audit firms to attract and retain top talent, particularly in highly competitive markets.

Key strategies mid-tier international audit networks are adopting to compete effectively with the Big Four

To attract large international clients currently audited by the Big Four, mid-tier international audit networks like Kreston Global are differentiating themselves and providing a unique value proposition. Some key strategies that are helping mid-tier firms attract large clients include: 

Personalised and Responsive Client Service. Mid-tier audit networks are competing with the Big Four by delivering bespoke and dynamic client service with partner-led focus. They place paramount importance on forging close ties with their clientele, ensuring that clients have unrestricted access to their partners and receive expeditious responses. This premium level of service and attention has elevated minor accounting firms to a level of accessibility and responsiveness that outmatches their larger counterparts. By offering such personalised attention, mid-tier audit firms are fortifying their client relationships and augmenting their client retention rates. 

Specialisation and Niche Expertise. To differentiate themselves and appeal to clients with unique demands, mid-tier audit firms are honing their expertise in specific industries or niches, such as technology, healthcare, or energy. Through a targeted approach, these firms are establishing themselves as thought leaders in their respective markets, earning a reputation for specialised knowledge and building credibility among clients. 

Flexibility. Mid-tier audit firms exhibit more nimbleness in their engagement approach, enabling them to customise their services to meet the unique requirements of each client. This can involve a greater willingness to adopt newer, innovative audit methodologies, such as data analytics or continuous auditing (see below). By exemplifying greater flexibility, mid-tier audit firms effectively cater to the constantly evolving needs of their clients and outperform the Big Four in competition. 

Technology and Innovation. Mid-tier audit networks are capitalising on technological advancements and innovation to heighten the efficacy and caliber of their audit services. Through investments in cutting-edge tools like data analytics, artificial intelligence, and automation, mid-tier audit firms conduct audits with greater efficiency and efficacy in contrast to larger audit firms. This affords them an edge in attracting clients who are seeking out more inventive and advanced audit solutions. 

International Reach. Mid-tier audit firms are competing with the Big Four by creating formidable alliances of autonomous member firms across the globe. This enables them to offer their clients global audit services and localised proficiency in a diverse array of countries. By exploiting their international networks, mid-tier audit firms furnish clients with the same caliber of worldwide coverage as the Big Four.

Outlook for the Global Audit Market

The trajectory of the worldwide audit market is shaped by various factors, including economic circumstances, regulatory advancements, and technological breakthroughs. Noteworthy trends that are anticipated to influence the global audit market in the near future include heightened regulatory scrutiny, technology-induced disruptions, the expansion of non-audit services, and the globalisation of the profession. 

Overall, the global audit market is poised to experience continued growth in the upcoming years, stimulated by a mounting demand for high-caliber and unbiased audit services. According to the Regional Research Reports, the global accounting firms’ market size is forecasted to surge at a compound annual growth rate (CAGR) of 12.60% from 2022-2030. 

That being said, the market is expected to intensify in competitiveness and intricacy, necessitating audit networks to adapt and evolve in order to thrive.


The Big Four audit firms boast substantial resources and expertise that enable them to offer a broad spectrum of services and operate in various jurisdictions. This reality is creating challenges for mid-tier audit networks to compete. 

Nonetheless, an increasing demand for alternative audit service providers presents a significant opportunity for mid-tier audit networks to play to their strengths, i.e., delivering specialised services, personalised experiences, and tailored solutions. 

Additionally, while it is undeniable that augmented regulatory scrutiny and emphasis on audit quality and independence can create compliance burdens for mid-tier audit networks, it also presents opportunities for them to differentiate themselves. Mid-tier audit networks are more agile and adept at adapting swiftly to regulatory changes and shifting audit standards. They can implement changes with greater efficiency and effectiveness than larger firms with more complicated structures and processes and can provide more personalised services to their clients. 

Moreover, technology is playing an increasingly significant role in the audit process, and mid-tier audit networks are leveraging technological advancements to enhance their efficiency and accuracy. This trend is leveling the playing field between mid-tier audit networks and the Big Four audit firms, allowing mid-tier firms to compete more effectively. 

Ultimately, the future of mid-tier international audit networks depends on their capacity to adapt to changing market dynamics, leverage technology to drive innovation, and deliver high-quality, specialised services that cater to the ever-evolving demands of clients.

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