The four biggest audit firms in Nigeria PWC, KPMG, Deloitte, Ernst and Young earned a sum of N7.53 billion as audit fees from Nigeria’s most capitalized firms in 2019.
The fees were earned by auditing 25 of the largest companies on the Nigerian stock exchange. According to data from Nairalytics, a research arm of Nairametrics, the four firms increased their revenue by 5% compared to N7.17 billion generated from the same companies in 2018. Nairalytics based its analysis on quoted companies as they are by law required to publish their annual reports. Private companies are not mandated to publish their annual reports in Nigeria.
Competition between the big 4 audit firms as they are classified intensified in the period under review as our research showed that PWC carted with the highest share having earned auditing some of the largest companies on the stock exchange. KPMG was a close second and is often thought to be the largest audit firm in the country by revenue when you add several other privately listed firms that they audit.
However, in this analysis, we looked at figures contained in the audited accounts of the largest 25 companies on the stock exchange who make up over 80% of market capitalization. The companies include, Access Bank, GT Bank, Dangote Sugar, Dangote Cement, Zenith Bank, UBA, Guinness Nigeria, NB Plc, Intl. Breweries, BUA Cement, NASCON, Dangote Sugar. Others include, Fidelity Bank, Total Plc, Flour Mills Plc, Transcorp, Seplat, Sterling Bank, FBNH, Stanbic IBTC, Union Bank, Custodian Investment, Nestle, Unilever and FCMB.
PWC grew its income from N3.39 billion in 2018 to N3.59 billion in 2019. Its earnings are diversified across banking, brewery, consumer goods and cement sectors. The banking sector contributed a significant 91.8% (N3.29 billion) of its total income, one of which includes GT bank, the most capitalized bank on the stock market. The audit firm received N791 million from the bank representing 23% of total revenue earned by the firm.
PWC was on the books of MTN Nigeria in 2018, earning N271 million from auditing their accounts but has been replaced by another firm, Grant Thornton in 2019. However, it replaced that loss with a N389 million increase in income from banking between 2018 and 2019.
Banking – 2018 N2.9 billion/ 2019 N3.2 billion.
Brewery – 2018 N98 million/2019 N98 million
Cement – 2018 N39 million/2019 N114 million
Consumer Goods – 2018 N71 million/2019 N80 million
Telecomm – 2018 N271 million/ 2019 Nil
Companies – Access Bank, FBNH, GT Bank, UBA, Guinness Nigeria, International Breweries, BUA Cement, Dangote Sugar, NASCON.
The international audit firm grew its earnings by 5.5% from its 8 clients on our list from N2.37 billion received in 2018 to N2.51 billion in 2019. The banking sector remained a dominant source of revenue for the audit firms with about 76% of total revenue accrued. Zenith Bank paid KPMG about N892 million in audit fees in 2019 representing 35.6% of the audit firms’ earnings auditing top firms. Zenith Bank is also Nigeria’s most profitable bank. KPMG also audited a diversified list of quoted companies across the banking, cement, consumer goods and oil & gas sectors.
Banking – 2018 N1.8 billion/ 2019 N1.88 billion.
Cement – 2018 N128 million/2019 N128 million
Consumer Goods – 2018 N404 million/2019 N443 million
Oil and Gas – 2018 N36 million/ 2019 N46 million
Companies – FCMB, Stanbic IBTC, Union Bank, Zenith Bank, Lafarge, Flour Mills Plc, Unilever, Total Plc.
Ernst and Young came third on our list with a total earning of N746 million in 2019 from five companies on our tracker list. The five companies include, Fidelity bank, Sterling bank, Custodian Investment, Transnational corporation and Seplat Petroleum.
However, the firm’s earnings recorded a slight decline when compared to N752 million recorded in 2018. This was due to the reduction in audit fees received from Seplat Petroleum. EY only has two banks on its list and this includes Fidelity and Sterling Bank both contributing a combined N414 million in earnings last year.
Banking – 2018 N413 million/2019 N414 million
Oil and Gas – 2018 N180 million/2019 N170 million
Others – 2018 N159 million/2019 N162 million.
Companies –Fidelity Bank, Sterling Bank, Seplat, Transcorp, Custodian Investment
The oldest indigenous accounting firm in Nigeria earned a total of N691.6 million in audit fees in 2019 compared to N660 million in 2018. Surprisingly, Deloitte does not have any of the major banks included in our list but works with Ahmed Zakaria to audit the accounts of one of the largest cement company in the country, Dangote Cement. Other companies on the list include, Presco, Nigerian Breweries, and Nestle Nigeria.
Deloitte in Nigeria is a merger between Akintola Williams and Deloitte Global.
Agriculture – 2018 N29 million/2019 N31.6 million
Brewery –2018 N57 million/2019 N61 million
Cement – 2018 N539 million/2019 N561 million.
Consumer Goods – 2018 N35 million/2019 N38 million
Companies – Presco, NB, Dangote Cement, Nestle.
A look at what happened in 2017
A similar study carried out by Nairametrics in 2017 showed that the big 4 audit firms earned a sum of N6.4 billion as audit fees in 2016 with PWC scooping the most earnings of N2.5 billion followed by KPMG with N2 billion. Ernst and Young also earned about N1.1 billion in 2016 and Deloitte earned N530.2 million in audit fees.