This analysis was originally posted by Audit Analytics.
This post is a part of Audit Analytics’ series on audit market concentration across select countries in Europe.
For fiscal year 2020, 10 accounting firms shared Germany’s audit market of the top companies comprising the DAX 40, MDAX 50, and SDAX 70 indexes trading on XETRA.
Unsurprisingly, the Big Four accounted for 91.1% of the market share for these top companies, with KPMG leading as the auditor of 47 companies, followed by PwC with 43 clients, then EY and Deloitte with 37 and 17 clients, respectively. Six other audit firms share the remaining 9.5% of the market; four firms each audit only one company.
Germany’s audit market for XETRA-traded top companies in 2020 was more condensed than in 2019. In our previous audit market concentration analysis, 12 firms audited the top 160 companies. Audit firm Lohr + Company did not audit any of this market in 2019. However, they did audit one SDAX 70 client in 2020. Conversely, three firms – RSM, S&P, and Moore – each audited one company on these indexes in 2019 but did not capture any of the market in 2020. The Big Four’s hold on the market remained relatively unchanged. There were a few slight shifts in the number of clients, but not the overall ranking; EY gained six clients, while KPMG and PwC each lost four clients since 2019.
XETRA Indexes and Reforms
In this 2020 audit market concentration analysis, we look at the top three indexes trading on XETRA in Germany – DAX 40, MDAX 50, and SDAX 70.
As a part of a wider reform process, Germany’s indexes underwent a shift in September 2021 that expanded the number of constituents in the DAX index from 30 to 40. The number of constituents in the MDAX was reduced from 60 to 50.
The indexes were reformed in the wake of the collapse of the German company Wirecard. Formerly a DAX constituent, Wirecard remained on the index, despite its insolvency, until Deutsche Boerse changed its selection rules and ejected the company in August 2020. In the wake of Wirecard’s failure, multiple rule changes were made. New requirements were instituted for DAX candidates, including a positive EBITDA in the company’s last two annual financial statements and a minimum liquidity threshold.
This 2020 Germany audit firm market share analysis is reflective of the new index compositions and includes the companies that filed a signed audit opinion for fiscal year 2020.
The Big Four exclusively audit the DAX 40. KPMG lead in 2020 with 38% of the market and Deloitte at the bottom with 5%.
Despite the expansion in the number of companies on this index, it remains dominated by the Big Four.
The Big Four rank in the same way in the MDAX as in the DAX. However, there is slightly less concentration in the top two firms. Notably, BDO has a small slice of this German audit market, providing audit services to two MDAX companies in 2020.
KPMG holds the top spot in market share among the next 70 companies on the index. They provide audit services to 17 companies, or 24%. Only one company separates the top three firms auditing SDAX 70 companies, with PwC and EY auditing 16 and 15 companies, respectively.
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