As Jim Peterson noted in his book, "Count Down: The Past, Present and Uncertain Future of Big Four Accounting Firms," the market for public company audits resembles that of utilities such as cable providers and power grids.

"Market forces strictly limit the number of providers with the necessary scope, scale, and economic incentive to deliver," wrote Peterson. He saw other similarities: a product or service that is standardized or undifferentiated, and a process or product that is highly regulated.

As the data from Audit Analytics released on Tuesday showed, the auditing market still resembles the remark. The Big Four still provide SEC audits to the vast majority of publicly held companies. (As of May 10, there were 248 other firms auditing publicly held companies.)

The audit market is most concentrated among the population of large accelerated filers — publicly held organizations with a worldwide public float of $700 million or more. (There are 2,225 large accelerated filers, about one-third of the total 6,652 registrants with the Securities and Exchange Commission.)

The Big Four audit 88% of the large accelerated filers. Ernst & Young audits more than a quarter (28.4%) of them, with Deloitte (21.4%) in second place, according to Audit Analytics data, followed by PwC and KPMG. (See chart.)

Outside of the Big Four, 36 other firms audit the remaining 12% of large accelerated filer registrants. Grant Thornton (3.9%) and BDO (2.4%) hold the largest chunks of that group. 

As public companies get smaller, the portion of the market audited by "other firms" increases. Among accelerated filers (public float of $75 million or more but less than $700 million), nearly 32% are audited by a firm other than Deloitte, EY, PwC, BDO, KPMG, or GT.

The largest U.S. auditing firms also audit the most publicly held companies — EY audits 979 companies, and Deloitte audits 783.

When counting market share by the total number of public companies audited, the market is still highly concentrated. The top 10 firms audit 68.8% of the entire SEC registrant population, and the standings reported on Tuesday remained unchanged from a year ago: EY, Deloitte, PwC, KPMG, Marcum, Withum, GT, BDO, BF Borgers, and RSM. 

The interesting thing about the market for public company audits is that, in the last 12 months, the population of SEC registrants has grown 10.3% and the population of large accelerated filers 17%. The jump occurred because of "the record-high number of IPOs and SPACs flooding the market in 2021," Audit Analytics said.

Given the slowdown in initial public offerings this year, including special purpose acquisition companies, it's doubtful that 2022 will add as many companies to the ranks of organizations needing auditing services.