Universal Stainless & Alloy Products recently dumped its former auditor, the global accounting firm PricewaterhouseCoopers, for the much smaller regional firm Schneider Downs & Co.

Chief Financial Officer Richard M. Ubinger said the Bridgeville specialty steelmaker was concerned it was "becoming too small for the Big Four," the nickname given to the nation's four largest accounting firms including Pricewaterhouse.

Universal is not alone. The nation's seven largest accounting firms either resigned or were dismissed by 526 clients in the first nine months of this year, according to AuditAnalytics, a Massachusetts firm that tracks auditor changes, vs. 469 in the same period last year and 342 the first nine months of 2002. In Pennsylvania, 24 publicly traded companies changed auditors in the first nine months of this year vs. 36 in all of last year, AuditAnalytics said.

Driving all the changes has been the Sarbanes-Oxley Act, the most far-reaching legislation affecting Wall Street since the Great Depression. Spawned by scandals at Enron and other companies that led to the demise of accountant Arthur Andersen, the landmark legislation that was passed in 2002 has turned the accounting world upside down, imposing a host of new mandates on companies and their outside auditors.

SOX, as the new regulation is known, requires publicly held companies to implement stricter controls over their accounting and test those controls to make sure they prevent fraud. Auditors must evaluate the effectiveness of the controls and issue an opinion. And chief executives and chief financial officers must certify the accuracy of financial reports in writing.

While companies have had various degrees of controls in place for years, SOX's stiffer requirements -- and the need to restore confidence in corporate accounting -- are forcing companies and their auditors to spend more time and money to comply.

The Big Four accounting firms -- the other three are Ernst & Young, Deloitte & Touche and KPMG -- are hiring more accountants and being more selective about taking on clients. Their heightened discretion stems from two factors: a desire to take care of their biggest clients and to avoid those whose management and accounting practices may expose them to unnecessary risks.

Worries about costs and accountants being stretched too thin are evident in a recent survey of nearly 2,000 chief financial officers and chairmen of corporate audit committees conducted by J.D. Power and Associates. Only 44 percent of the CFOs expressed high levels of confidence in the accounting industry.

Ron Conlin, a partner with the marketing firm, says because the Big Four puts most emphasis on large clients, "ratings of their performance, particularly among smaller clients, are lower. When you compare them to other industries, these aren't good scores."

The Big Four's strategy means more of their smaller clients looking for better service or lower fees are turning to smaller national and regional accounting firms such as Schneider Downs, the new Universal Stainless auditor.

"This is like a whole new business segment that's opened up to us," says Raymond W. Buehler, Jr., the Downtown-based accounting firm's CEO. "In the past nine months, I bet you we've had as many at bats as we've had in a three-year period."

Buehler says the Downtown firm's revenue jumped 12 percent to $27 million in its most recent fiscal year and this year, "I assure you we're going to be at $31 million."

Other firms that have made the switch include computer networking equipment provider Black Box and Parkvale Financial, both whom formerly relied on Ernst & Young. Black Box selected BDO Seidman, a national firm based in Chicago, while Parkvale chose Parente Randolph, a regional firm with offices in Pennsylvania, New Jersey, Delaware and Washington, D.C.

"For us, it's turning out to be a better situation because we get better service," says Jason Ross, Parkvale's director of audit and compliance. "Basically, the bigger firms are taking this as an opportunity to raise fees."

Ramping up for SOX wasn't easy because accountants were in short supply when accounting scandals started making headlines.

"All of our young people wanted to be dot.commers, investment bankers and consultants," says Robert C. Denove, managing partner of Deloitte & Touche USA's Pittsburgh office.

Denove says the candidate pool is deeper these days because more students are pursuing accounting degrees. He expects to hire about 23 of them in May to compliment his staff of 719.

"And that's just in the audit practice," he says. Throw in people needed in the firm's tax and other practices and "that number could probably be pushing closer to 45 or 50," Denove adds.

Staffing at Ernst & Young's Pittsburgh office has gone up about 25 percent in the last year, says Stephen W. Klemash, managing partner of the firm's Pittsburgh office. Joseph DiVito, a principle in Pricewaterhouse's Pittsburgh office, says the firm has hired experienced accountants as well as recent graduates since SOX was enacted. "This year, we've stepped that up even further," he says.

While views on the benefits of the tougher standards vary widely, there's no question SOX will help accounting graduates pay off their student loans.

"More of them are getting jobs with the better firms than in the past few years," says Edward Ketz, an accounting professor at Penn State's Smeal College of Business.

Just how big of a deal SOX will be depends on how big it is and how well controlled a company's accounting procedures were before the legislation. Federal regulations governing banks and financial services firm have had to comply with SOX-type controls for more than a decade.

As a result, Ross doesn't think compliance will be that big of a deal for Parkvale. "Right off the bat, we were 50 to 60 percent of the way there," he says.

While SOX has kept accounting firms and their clients busy for more than two years, the big push will come over the new few months. Large companies with fiscal years ending on or after Nov. 15 must file SOX-compliant reports early next year. Smaller companies such as Universal Stainless won't have to comply until they file reports for fiscal years ending after July 15.

Says Klemash: "It's going to be intense, very intense."