Overview of Big Four Accounting Firms
There is a reason why the Big 4 accounting firms are called “Big?” That’s because, their size, reputation and worldwide reach and how they dominate the field. There are lots of other firms that provide similar services, but they are really small in comparison. Let’s go back to the early 1900s to understand why they are only four of them.
Up or out policies, for example, are much more likely to be found in their consulting practices than an audit. Members of the Big Four accounting firms include:
- Deloitte Touche Tohmatsu Limited popularly called out as Deloitte was co-founded by William Deloitte.
- Ernst & Young popularly called out as EY was earlier Ernst and Whinney which merged with Arthur Young to create Ernst and Young in 1989.
- Klynveld Peat Marwick Goerdeler popularly called out as KPMG, formed through the merger of Peat Marwick International and Klynveld Main Goerdeler.
- Price Waterhouse Coopers popularly called out as PWC which was formed by the merger of Price Waterhouse and Coopers & Lybrand.
The Big 4 accounting firms were earlier known as Big 8 made up of (1) Arthur Andersen, (2) Arthur Young & Co., (3) Coopers & Lybrand, (4) Ernst & Whiney, (5) Deloitte, Haskins & Sells, (6) KPMG, (7) Touché Ross, and (8) Price Waterhouse.
Then, after a series of mergers and dissolutions came the elite four out of the eight.
Next to the Big 4 accounting firms are BDO International, the 5th largest accounting firm with 73,850 employees in more than 150 countries and 2017 revenue of $8.1 billion; and Grant Thornton, placing in 6th with over 50,000 employees in 135 countries.
Before there were the Big Four Accounting Firms, for many years there was a Big Eight. These consolidations, from the 1990s through the early 2000s, reduced the Big Eight to the Big Four:
- Deloitte Haskins & Sells merged with Touché Ross Tohmatsu
- Arthur Young merged with Ernst & Whinney
- Price Waterhouse merged with Coopers & Lybrand
- Arthur Andersen was forced out of business by expensive lawsuits alleging audit malfeasance, notably in the Enron and WorldCom scandals of 2002.
Big 4 Accounting Firms Revenues
Below is the Big Four accounting firms revenue in $ billion
After the instant result of the Sarbanes-Oxley Act, these accounting firms seem to confirm that they had discarded their efforts to become vital players in the market for legal services, openly declaring to facilitate they were unwinding their legal networks.
In spite of this public pronouncement and some initial performance to split up their legal arms, however, in the last decade, these firms have quietly rebuilt their legal networks to the point where they are now larger than they were in 2002. Altogether, a total of 106 countries are currently hosting at least one of the Big 4’s legal practices, giving them a noteworthy presence in every important legal market in the world with the notable exception of the United States.
List of Big 4 Accounting Firms
- Pricewaterhouse Coopers (PwC)
- Ernst & Young (EY)
Let’s see each one of them in detail.
#1 – Deloitte
Deloitte, also known as Deloitte Touché Tohmatsu Limited, is a UK-incorporated international audit services firm with its headquarters in New York City. Every day, practitioners make an impact that matters, thriving in a dynamic culture of inclusion, collaboration, and high performance.
#2- Pricewaterhouse Coopers (PwC)
Another international professional service firm, Pricewaterhouse Coopers is set-up in the Big Four Accounting Firms. Headquartered in London, Your career is just that; yours. Internships in PwC are also taxing with loads of work but the work culture compensates for the stress levels.
#3 – KPMG
KPMG, which is also known as Klynveld Peat Marwick Goerdeler, has made it a priority to build a culture that rewards high performance and nurtures talent.
#4 – Ernst & Young (EY)
Ernst & Young, sometimes referred to as EY, has headquarters in London. EY has set out a clear vision of where we expect to be in the year 2020 and have a detailed roadmap for reaching our objectives. As a result, you will have a greater opportunity than ever before to gain insights and experiences that will last you a lifetime
- Associate – first and the entry job offered is a standard in the Big Four accounting firms.
- Senior Associate – The job responsibilities of a senior associate are quite similar in nature to that of an associate, but the magnitude is different.
- Manager – it is a managerial position in which you will be required to manage and supervise a team of associates and senior associates.
- Senior Manager – The job roles and responsibilities at the level of a Senior Manager are completely different than the three levels that we just discussed.
- Partner – This is a very senior position in any accounting and consulting firm. At this position, you will be in charge of functional units and many times even a geographic location.
- Senior Partner – A senior partner is one who will be a part of all the strategic decisions made by the firm.
While Big 4 accounting firms are not as strong as the reputation of swelling bracket banks and the MBB of consulting names they do have a strong brand. Having said that, they are still recognized and respected internationally. It is most likely that you will go on to work with one of your clients or for a company that is in a similar industry that you focused on while working in the big 4.
The future of the companies looks bright considering the monopoly they have in the audit and professional services. However, the regulators accuse the auditors and the accounting firms to have given a complacent review until the 2008 crisis. Regulators and lawmakers have called for new reforms to improve transparency and impartiality among the big four accounting firms. These significant market players are trying to redraw the boundaries of professional services, and to how law firms, clients, and regulators react to the potentially upsetting, but still largely uncharted, changes that these firms are bringing to the international legal services market.
This has been a guide to Big Four Accounting Firms. Here we provide the list of big four accounting firms, job opportunities, revenue worldwide as well as its historical facts and services offered. You may also have a look at our accounting articles below to learn more –