22 December 2021

Press Release:
Federal Chamber of Auditors Identifies a Still Falling Proportion of Non-Audit Services in Publicly Traded Companies

The trend towards the networking of auditors continues – The analysis of the German auditor market for 2020 by the Federal Chamber of Auditors [Wirtschaftsprüferkammer (WPK)] shows that the proportion of non-audit services among the total fees earned from publicly traded companies fells between 2018 and 2020.

The total fees of auditing companies, which audited publicly traded companies within the meaning of Article 264d of the German Commercial Code [Handelsgesetzbuch (HGB)], was approx. Euro 820 million in 2020. Of this, around Euro 618 million was incurred for auditing services and around Euro 202 million for non-auditing services. This means that in the reporting year 2020, and average 24.6% (2019: 25.1%; 2018 29.1%) of the total fees were fees for non-auditing services. The comparison with the previous years’ documents the development that increasingly fewer non-auditing services are being provided in the sector concerned.

Moreover, the WPK has noted that the number of networks entered in the WPK professional registers and the auditing companies that are members of them is rising steadily. At the end of 2020, 864 auditing companies (2019: 845, 2018: 822) were registered in 458 networks (2019: 446, 2018: 424).

Moreover, between 2019 and 2020, the WPK identified 65 changes of auditor in publicly traded companies. In 31 cases, the auditing mandate remained within the “Big Four” companies, Deloitte, Ernst & Young, KPMG and PricewaterhouseCoopers. Six mandates remained within the group of medium-sized companies and five audits within the group of small companies. Thirteen auditing mandates moved from a bigger to a smaller company. And in ten cases, the move was in the opposite direction. Within the context of this snapshot, the audits therefore swapped in both directions.

Other results of the study:

  • In total, 415 auditing companies audited 2,644 financial statements from companies affiliated to the capital market (2019: 430 auditing companies with 2,626 mandates; 2018: 443 auditing companies with 2,605 mandates). 63 of these companies (2019: 68; 2018: 71) conducted 991 audits of financial statements (2019: 1,012; 2018: 1,005) in companies of public interest within the meaning of Article 316a HGB.
  • The number of publicly traded companies within the meaning of Article 264d HGB is no longer continuing to fall.
  • As far as audits of financial statements of publicly traded companies are concerned, 95.6% of the fees for auditing services were spread among the four biggest auditing companies (2019: 95.4%; 2018: 96,2%).
  • The willingness to register as a statutory auditor and thus to participate in the quality control procedure increases with the size of the auditing company.

The analysis by WPK offers insight into the current structure of the auditing market in Germany. It is based on data from the professional register, which are exclusively available to WPK in this form. These data are supplemented by empirically calculated data. Publications in the Federal Gazette, the lists of companies provided by the Federal Financial Supervisory Authority [Bundesanstalt für Finanzdienstleistungsaufsicht] and the transparency reports from the auditors of companies of public interest are used as sources.

The size structures of auditing companies and the spread of mandates for audits from companies traded on the capital market are considered. Furthermore, the development and structure of auditing fees and sales revenues for auditors of companies of public interest according to Article 316a HGB are analysed. Methodologically, the focus was on audits demonstrably ended in 2020 and the financial information included in the transparency reports