PricewaterhouseCoopers (PwC) Jamaica and Baker Tilly Strachan Lafayette (BTSL) have gained significant ground in the last five years as a number of listed companies switch to them for external auditing services amidst a continued shift in the accounting space.

Baker Tilly has so far gained Pulse Investments Limited, Radio Jamaica, Spur Tree Spices Jamaica Limited as clients in 2024 alone from KPMG Jamaica and BDO (Binder Dijker Otte) Jamaica this year. The Jamaican accounting business also added Caribbean Cream Limited, Jamaican Teas Limited and QWI Investments Limited in 2023, all former clients of KPMG Jamaica. This along with the acquisition of two Junior Market firms in 2020 has seen its Jamaican client base rise from one listed firm in 2019 to 11 today.

PwC Jamaica also signed on IronRock Insurance Company Limited whose shareholders voted in favour of them being appointed as external auditors at the company’s annual general meeting (AGM) on December 3. PwC Jamaica also gained Kingston Wharves Limited due to the change in majority owner from Jamaica Producers Group Limited to Pan Jamaica Group Limited in 2023. A similar event occurred in 2019 when NCB Financial Group Limited acquired the majority interest in Guardian Holdings Limited (GHL), which resulted in a change of auditors from Ernst & Young (EY) to PwC Trinidad. That resulted in GHL’s subsidiaries in Jamaica also changing to PwC Jamaica.

As a result of new companies listing on the Jamaica Stock Exchange (JSE) and auditor changes, PwC Jamaica now audits the most Jamaican firms on the JSE with the figure rising from 17 in 2019 to 22 in 2024. KPMG Jamaica previously had the most clients in 2019 with about 25 clients which has since whittled down to 15 in 2024. The newest auditor to the market is The Firm CB, which audits Kintyre Holdings (JA) Limited (formerly iCreate Limited), whose main principal Tyrone Wilson dropped Crichton, Mullings and Associates (CMA) in November 2023 at the company’s AGM.

With respect to the overall JSE, PwC firms in the Caribbean audit 27 companies followed by KPMG firms in the Caribbean with 19 companies, BDO firms and BTSL with 11 companies and CMA with 10 companies. The latest company to announce an auditor change was Indies Pharma Jamaica Limited which switched from BDO Jamaica to HLB Mair Russel (formerly Mair Russel Grant Thornton) effective September 17.

“We wish to state further that BDO has been our auditor for over 18 years, and we thank them for their services. Their resignation is not related to any disagreement or professional concerns with IPJL regarding accounting principles or practices, financial statements, disclosure or any material issue,” said Indies Pharma in their JSE disclosure.

The change in auditors comes amidst a wave of late submissions of audited financials by more than half of the companies on the JSE, which have indicated a range of reasons, from more time needed by the auditors to complete their audit of new accounting standards such as IFRS 17 for insurance contracts, delays in working timelines due to natural disasters like Hurricane Beryl or a pandemic like COVID-19 or more time to review assurance procedures of the company. For context, a company’s management is responsible for preparing the financial statements that are in accordance with IFRS (International Financial Reporting Standards) and the country of domicile’s relevant companies act. An external audit of financial statements involves an auditor reviewing contracts, verifying with clients the value of business carried out, testing controls and other procedures concerning cash and inventory movements.

The late submission of audited financials has not only cost clients listed on the JSE Main Market and USD market to rack up thousands of dollars in fines, but also face suspension from trading due to breaching JSE’s rules. EquityLine Mortgage Investment Corporation, EduFocal Limited, Productive Business Solutions Limited (PBS) and IronRock are the JSE listed firms that have all been suspended so far this year for late audited financials.

The accounting profession has been facing significant pressure across the globe over the last five years as a wave of professional accountants retire coupled with an exodus of persons either leaving the industry, going to different firms or moving to the same branded firm in another country such as from PwC Jamaica to PwC USA. Some audit firms locally have had to increase salaries by 20 to 50 per cent in the last 3 years to keep up with not only inflation but retain fleeting talent. This has also translated to higher audit fees with a firm like Access Financial Services Limited’s audit costs jumping from $7.76 million in March 2019 to $34.82 million in March 2024.

Accountants are set to face new changes to financial statement disclosures in January 2027 when IFRS 18 and IFRS 19 go live. This has seen accountants in Jamaica advocate for a possible revision to the reporting timelines for some listed companies due to the fact that most firms report around the beginning or ending of March each year, which is also the final submission for taxes as well. An Fortune article in March 2024 highlighted that the USA is short of about 340,000 accountants while marketplace.org noted that several states in the USA are considering changing the number of credit hours from 150 to 120 hours required to attain a CPA (chartered public accountant) licence.

PwC Jamaica appointed Bruce Scott as its territory leader in July 2022 after Leighton McKnight retired, while Raymond Campbell became the new country leader of KPMG in Caricom on October 1 following the retirement of R Tarun Handa. A new accounting firm called Signature Creed & Associates was formed in May 2024 following the merger of Signature Tax Advisory and Creed Financial Consultancy Limited. There are hints in the Jamaican industry that there is set to be another merger between a rising accounting firm and a local outfit.

The Jamaican Fair Trading Commission (FTC) noted in its April 2021 report of audit services industry in Jamaica that of the 60 JSE listings examined in 2018, PWC earned 66 per cent of audit fees with only 15 clients or 25 per cent of the listings while KPMG earned 27 per cent of audit fees with 20 clients. The remaining audit firms earned seven per cent of fees with 25 clients.