A few days ago, the Chinese Institute of Certified Public Accountants (hereinafter referred to as the China Certified Public Accountants Association) released the "2023 Annual Comprehensive Evaluation of 100 Accounting Firms Ranking Information".

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The 2023 ranking of 100 accounting firms in comprehensive evaluation has been released

On October 28, 2024, the China Accounting Association released the "2023 Annual Comprehensive Evaluation of 100 Accounting Firms Ranking Information". In accordance with the requirements of the Measures for the Comprehensive Evaluation and Ranking of Accounting Firms, the comprehensive evaluation of accounting firms is carried out in the form of index evaluation, including two parts: basic indicators and additional indicators. Among them, the basic indicators include the income of the firm, the stability of the partner team, the number of certified public accountants, the level of informatization expenditure, the handling of penalties, etc., with a total score of 1,000 points, and the additional indicators are evaluated around the cultivation of high-level talents in the industry and the internal governance of accounting firms, with a total score of 11 points.

After comprehensive evaluation, Ernst & Young scored 957.90 points, ranking first among accounting firms in 2023, KPMG, Fong's, Tianjian, and Rongcheng ranked second to fifth with 913.59 points, 887.95 points, 887.53 points, and 873.24 points, respectively, and other accounting firms in the top 10 also included Grant Thornton, Baker Tilly International, Deloitte, ShineWing and Dahua, with a total of 42 accounting firms scoring more than 600 points.

Compared with 2022, Ernst & Young and KPMG have risen one place each, Fong's, Tianjian and Rongcheng have risen two places respectively, Deloitte has dropped four places, and there has been no significant change in the top 10 accounting firms. However, it is worth mentioning that in the 2022 ranking of 100 accounting firms, PwC ranked first with a score of 980.86, but in the 2023 comprehensive evaluation, PwC failed to make the list.

Which is the strongest audit business of domestic listed companies?

In terms of revenue, in 2023, Ernst & Young ranked first among the 100 accounting firms with a total revenue of 6.814 billion yuan, including audit income of 6.165 billion yuan, consulting income of 166.4 million yuan and other income of 382 million yuan. In the audit business of domestic listed companies, the number of EY clients is 138, with a total revenue of 812 million yuan, concentrated in the financial industry and manufacturing industry.

In 2023, EY has a total of 21 financial clients, such as Ping An Bank (000001. SZ), GF Securities (000776. SZ), China Construction Bank (601939. SH), Oriental Fortune (300059. SZ), China Galaxy (601881. SH), with a total revenue of 376 million yuan, and 70 manufacturing customers, such as BYD (002594.SZ), SMIC (688981. SH), Arowana (300999. SZ), Baosteel Co., Ltd. (600019. SH), ZTE (000063. SZ), with a total revenue of 189 million yuan.

At the same time, EY also has a relatively high proportion of revenue from the audit business and financial business of overseas listed companies, of which 299 overseas listed companies have audit business customers with a total revenue of 1.605 billion yuan, and 235 financial business customers have a total income of 762 million yuan.

In addition to Ernst & Young, accounting firms with total revenue of more than RMB5 billion in 2023 include Deloitte, KPMG, and Fong's. In addition, the total revenue of accounting firms such as Tianjian, Baker Tilly International, ShineWing, Dahua, Rongcheng, Grant Thornton, Zhongshen Zhonghuan, Zhongxinghua, Daxin, Zhongxingcai, and Zhonghui in 2023 exceeded 1 billion yuan.

In 2023, Fong's total revenue will be 5.002 billion yuan, including audit income of 3.516 billion yuan, consulting income of 748 million yuan, assurance income of 431 million yuan, accounting service income of 54 million yuan, cost income of 16 million yuan and other income of 236 million yuan. In the audit business of domestic listed companies, the number of customers of Fong's is 671, with a total revenue of 828 million yuan, of which 472 are manufacturing customers, such as Lixun Precision (002475.SZ), Haiguang Information (688041. SH), China Heavy Industries (Rights Protection) (601989. SH), Hangfa Power (600893. SH), Changan Automobile (000625. SZ), with a total revenue of 509 million yuan.

It is worth mentioning that the number of clients of domestic listed companies in the "Big Four" is not as good as that of domestic accounting firms, but the fees are higher. In 2023, in terms of audit business of domestic listed companies, Deloitte's average audit income per client reached 8.1511 million yuan, and the average audit income of a single client of KPMG and Ernst & Young also reached 7.1824 million yuan and 5.8816 million yuan respectively. Among the top 10 domestic accounting firms in terms of total revenue, ShineWing has the highest average audit income of a single client, at 1.333 million yuan, and the average audit income of a single client of Baker Tilly International, Grant Thornton, Fong's, Dahua, Rongcheng and Tianjian is 1.2848 million yuan, 1.2624 million yuan, 1.2345 million yuan, 1.1892 million yuan, 1.1197 million yuan and 1.0871 million yuan respectively.

In terms of industries, the financial industry has the highest audit fees, among which Deloitte's average audit income per client of the audit business of listed companies in the domestic financial industry is as high as 23.1712 million yuan.

In terms of the number of certified public accountants, Fong's has 2,451 certified public accountants, of which 1,251 are certified public accountants who have been practicing for more than 5 years and are under the age of 60, ranking first, and Tianjian has 2,272 certified public accountants, of which 874 are certified public accountants who have been practicing for more than 5 years and are under the age of 60, ranking second.

In terms of IPOs, from 2021 to 2023, Tianjian served as an auditor for 238 IPOs and 252 issuers, ranking first among accounting firms in China.

Deloitte was subject to administrative penalties imposed by the Ministry of Finance, and its total score was reduced by about 100 points

Dealing with penalties is one of the basic indicators for the comprehensive evaluation of accounting firms. According to the information submitted by various accounting firms, from 2021 to 2023, Ernst & Young, KPMG, Rongcheng, Grant Thornton and their certified public accountants were not subject to criminal penalties, administrative penalties and professional disciplinary actions.

Among the top 10 accounting firms in the overall ranking, Dahua has the most administrative penalties. From 2021 to 2023, the firm was responsible for the development of Lianfa (830819. NQ), Changyuan Group (600525. SH), Zhangzidao (002069. SZ), Blue Shield (300297. SZ), delisted Jinyu (600086. SH) cases have been subject to administrative penalties, and 13 certified public accountants have been subject to administrative penalties or market bans. In May 2024, Dahua Yinjin Tongling (Rights Protection) (300091. SZ) project was suspended from securities service business for six months.

In 2023, Deloitte was administratively punished by the Ministry of Finance for a number of violations in the audit project of China Huarong Asset Management Co., Ltd., and the Ministry of Finance issued a warning to Deloitte Touche Tohmatsu Touche Tohmatsu for three months, confiscated the illegal income of Deloitte Beijing Office, and imposed a total fine of RMB 212 million. Fourteen certified public accountants from Deloitte Beijing office were administratively punished by the Ministry of Finance for the case, six of whom were suspended from practice and two had their CPA certificates revoked.

Deloitte dropped four places in the 2023 overall ranking, with a score of 103.30 points lower than in 2022, and the above-mentioned administrative penalties may lead to a large reduction in the basic indicators.