Steinway Musical Instruments is the latest company to drop a Big Four auditor, switching from Deloitte & Touche to UHY Advisors for its fiscal year ending December 2008.
Like several other companies that recently made similar moves, Steinway cited cost savings as the chief motivator. “We have had a very positive relationship with Deloitte over the years,” said the company’s CFO, Dennis Hanson. “However, we believe UHY offers our shareholders the best combination of cost and quality on a go-forward basis.”
The company said it did not have any disagreement with Deloitte on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures.
UHY is the 12th-largest professional services firm in the United States. It has nearly 200 offices in more than 65 countries.
In 2006, Steinway paid Deloitte nearly $2.2 million in fees for the audit of its financial statements and attestation services, up from $1.8 million the prior year. The company also paid about $42,000 in both 2005 and 2006 for due-diligence services and Sarbanes-Oxley Section 404 readiness services.
Steinway additionally shelled out $339,000 in tax fees in 2006, up from $194,000 the previous year. These fees relate to the preparation of tax returns and general advice relating to tax planning and compliance.
Steinway, which has scheduled its annual meeting for May 19, is among a number of companies that recently replaced a Big Four auditor for a smaller firm. Late last month, IDT Corp. replaced Ernst & Young with Grant Thornton. “Grant Thornton offers our shareholders the best combination of cost and quality,” said company CFO Steve Brown.
In January CFO.com reported that Catapult Communications Corp. dropped Deloitte, replacing it with local auditor Stonefield Josephson. Catapult estimated the change would save 43 percent to 49 percent in accounting expenses this year, off the $985,000 the company would have paid Deloitte for fiscal 2008.
In general, however, the movement from Big Four auditing firms to smaller ones has been slowing significantly in recent years. A recent CFO.com analysis of data from Audit Analytics shows that in 2007, 101 public companies moved from a Big Four firm to a mid-tier or regional firm, down from 163 in 2006 and 275 in 2005.