Big Four (audit firms)

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The Big Four are the four largest international professional services networks, offering audit, assurance, tax, consulting, advisory, actuarial, corporate finance, and legal services. They handle the vast majority of audits for publicly traded companies as well as many private companies, creating an oligopoly in auditing large companies. It is reported that the Big Four audit 99% of the companies in the FTSE 100, and 96% of the companies in the FTSE 250 Index, an index of the leading mid-cap listing companies.[1] The Big Four firms are shown below, with their latest publicly available data.

FirmRevenuesEmployeesRevenue per EmployeeFiscal YearHeadquartersSource
Deloitte$34.2bn210,400$162,5472014United States[2]
PwC$32.1bn184,000$174,4562013United Kingdom[3]
EY$27.4bn190,000$144,2112014United Kingdom[4]

This group was once known as the "Big Eight", and was reduced to the "Big Six" and then "Big Five" by a series of mergers. The Big Five became the Big Four after the demise of Arthur Andersen in 2002, following its involvement in the Enron scandal.

BDO and Grant Thornton are the fifth and sixth largest firms, respectively.

Legal structure[edit]

None of the Big Four firms is a single firm; rather, they are professional services networks. Each is a network of firms, owned and managed independently, which have entered into agreements with other member firms in the network to share a common name, brand and quality standards. Each network has established an entity to co-ordinate the activities of the network. In one case (KPMG), the co-ordinating entity is Swiss, and in three cases (Deloitte Touche Tohmatsu, PricewaterhouseCoopers and Ernst & Young) the co-ordinating entity is a UK limited company. Those entities do not themselves perform external professional services, and do not own or control the member firms. They are similar to law firm networks found in the legal profession.

In many cases each member firm practises in a single country, and is structured to comply with the regulatory environment in that country. In 2007 KPMG announced a merger of four member firms (in the United Kingdom, Germany, Switzerland and Liechtenstein) to form a single firm.

Ernst & Young also includes separate legal entities which manage three of its four areas: Americas, EMEIA (Europe, The Middle East, India and Africa), and Asia-Pacific. (Note: the Japan area does not have a separate area management entity). These firms coordinate services performed by local firms within their respective areas but do not perform services or hold ownership in the local entities.[6]

The figures in this article refer to the combined revenues of each network of firms.

Mergers and the Big Auditors[edit]

Since 1989, mergers and one major scandal involving Arthur Andersen have reduced the number of major professional-services firms from eight to four.

Big 8[edit]

The firms were called the Big 8 for most of the 20th century, reflecting the international dominance of the eight largest firms (presented here in alphabetical order):

Most of the Big 8 originated in alliances formed between British and U.S. audit firms in the 19th or early 20th centuries. Price Waterhouse was a UK firm which opened a U.S. office in 1890 and subsequently established a separate U.S. partnership. The UK and U.S. Peat Marwick Mitchell firms adopted a common name in 1925. Other firms used separate names for domestic business, and did not adopt common names until much later: Touche Ross in 1960, Arthur Young (at first Arthur Young, McLelland Moores) in 1968, Coopers & Lybrand in 1973, Deloitte Haskins & Sells in 1978 and Ernst & Whinney in 1979.[8]

The firms' initial international expansion was driven by the needs of British and U.S.-based multinationals for worldwide service. They expanded by forming local partnerships or by forming alliances with local firms.

Arthur Andersen had a different history. The firm originated in the United States, and expanded internationally by establishing its own offices in other markets, including the United Kingdom.

In the 1980s the Big 8, each now with global branding, adopted modern marketing and grew rapidly. They merged with many smaller firms. One of the largest of these mergers was in 1987, when Peat Marwick merged with the Klynveld Main Goerdeler (KMG) group to become KPMG Peat Marwick, later known simply as KPMG.

Big 6[edit]

Competition among these firms intensified and the Big 8 became the Big 6 in 1989 when Ernst & Whinney merged with Arthur Young to form Ernst & Young in June, and Deloitte, Haskins & Sells merged with Touche Ross to form Deloitte & Touche in August.

Confusingly, in the United Kingdom the local firm of Deloitte, Haskins & Sells merged instead with Coopers & Lybrand. For some years after the merger, the merged firm was called Coopers & Lybrand Deloitte and the local firm of Touche Ross kept its original name. In the mid 1990s however, both UK firms changed their names to match those of their respective international organizations. On the other hand, in Australia the local firm of Touche Ross merged instead with KPMG.[9][10] It is for these reasons that the Deloitte & Touche international organization was known as DRT International (later DTT International), to avoid use of names which would have been ambiguous (as well as contested) in certain markets.

Elsewhere, the local firm in Malaysia merged with Arthur Andersen.

Big 5[edit]

The Big 6 became the Big 5 in July 1998 when Price Waterhouse merged with Coopers & Lybrand to form PricewaterhouseCoopers.

Big 4[edit]

The Enron collapse and ensuing investigation prompted scrutiny of their financial reporting, which was audited by Arthur Andersen, which eventually was indicted for obstruction of justice for shredding documents related to the audit in the 2001 Enron scandal. The resulting conviction, since overturned, still effectively meant the end for Arthur Andersen. Most of its country practices around the world have been sold to members of what is now the Big Four — notably Ernst & Young globally; Deloitte & Touche in the UK, Canada, Spain, and Brazil; and PricewaterhouseCoopers (now known as PwC) in China and Hong Kong.

2002 saw the passage of the Sarbanes–Oxley Act into law, providing strict compliance rules to both businesses and their auditors.

In 2010 Deloitte with its 1.8% growth was able to beat PricewaterhouseCoopers with its 1.5% growth to gain first place and become the largest firm in the industry. In 2011, PwC re-gained the first place with 10% revenue growth. In 2013, these two firms still claim the top two spots with only $200 million or 0.5% revenue difference. However, Deloitte has seen faster growth than PwC over the last few years indicating that they may reclaim the #1 spot in future years.[11]

A year at the end indicates year of formation through merger or adoption of single brand name. A year in the beginning indicates date of closure of functioning or going out of prominence.

Policy issues concerning industry concentration[edit]

In the wake of industry concentration and individual firm failure, the issue of a credible alternative industry structure has been raised.[12] The limiting factor on the growth of additional firms is that although some of the firms in the next tier have become quite substantial, and have formed international networks, effectively all very large public companies insist on having a "Big Four" audit, so the smaller firms have no way to grow into the top end of the market.

Documents published in June 2010 show that some UK companies' banking covenants required them to use one of the Big Four. This approach from the lender prevents firms in the next tier from competing for audit work for such companies. The British Bankers' Association said that such clauses are rare.[13] Current discussions in the UK consider outlawing such clauses.

In 2011,The UK House of Lords completed an inquiry into the financial crisis, and called for an Office of Fair Trading investigation into the dominance of the Big Four.[14] It is reported that the Big Four audit all but one of the companies that constitute the FTSE 100, and 240 of the companies in the FTSE 250, an index of the leading mid-cap listing companies.[1]

In Ireland, the Director of Corporate Enforcement, in February 2011 said, auditors "report surprisingly few types of company law offences to us", with the so-called "big four" auditing firms reporting the least often to his office, at just 5pc of all reports.[15]

Global member firms[edit]

RegionDeloitte Touche TohmatsuPwCErnst & YoungKPMG
AustraliaDeloitte Touche TohmatsuPricewaterhouseCoopersErnst & YoungKPMG
ArgentinaDeloitte & Co. S.R.LPricewaterhouse & Co. S.R.L.Ernst & YoungKPMG
BangladeshNoneNoneNoneRahman Rahman Huq
ChinaDeloitte Hua YongPricewaterhouseCoopers Zhong TianErnst & Young Hua MingKPMG Hua Zhen
EgyptKamel SalehMansour & Co.Allied for Accounting and Auditing (Emad Ragheb)Hazem Hassan
El SalvadorDTT El Salvador, S.A. de C.V.PricewaterhouseCoopers El SalvadorErnst & Young El Salvador, S.A. de C.V.KPMG, S.A.
FinlandDeloitte & Touche OyPricewaterhouseCoopers OyErnst & Young OyKPMG Oy Ab
Hong KongDeloittePricewaterhouseCoopersErnst & YoungKPMG
IndiaDeloitte Haskins & Sells, Deloitte Haskins & Sells LLP, P C Hansotia, C C Chokshi & Co, S.B. Billimoria, M.Pal & Co., Fraser & Ross and Touche Ross & co and A.F Ferguson, Deloitte Touche Tohmatsu, Deloitte & Touche Consulting, Deloitte Audit & Enterprise Risk ServicesPrice Waterhouse, Price Waterhouse & Co., Lovelock & Lewes, and Dalal & Shah, PricewatershouseCoopers, PricewaterhouseCoopers Service Delivery CentreS.R.Batliboi & Co. LLP, S.R.Batliboi & Associates LLP, S.V.Ghatalia & Associates LLP, S R B C & CO LLP, Ernst & Young LLP, PDS LegalBSR & Co LLP, BSR And Company, BSR And Associates, Advaita Legal
IndonesiaKAP Osman Bing Satrio & EnyKAP Tanudiredja, Wibisana & RekanKAP Purwantono, Suherman & SurjaKAP Sidharta dan Widjaja
IsraelDeloitte Brightman Almagor ZoharKesselman & Kesselman, PwC IsraelKost, Forer, Gabbay & Kasierer (Ernst & Young Israel)KPMG Somekh Chaikin
ItalyDeloitte Touche TohmatsuPricewaterhouseCoopersReconta Ernst & Young SpA, Ernst & Young Financial Business Advisors SpA,KPMG
JapanDeloitte Touche Tohmatsu
Kansa Houjin Tohmatsu
PricewaterhouseCoopers Aarata
Aarata Kansa Houjin
Ernst & Young ShinNihon LLC
ShinNihon Yugen-sekinin Kansa Houjin
KPMG AZSA LLC (formerly KPMG AZSA & Co.)
Azsa Kansa Houjin
JordanDeloitte Touche (M.E)PwCErnst & YoungKPMG
KenyaDeloitte & Touche (E.A)PwCErnst & YoungKPMG
LebanonDeloitte Touche (M.E)PwCErnst & YoungKPMG PCC
MalaysiaDeloitte KassimChanPricewaterhouseCoopersErnst & YoungKPMG
MexicoGalaz, Yamazaki, Ruiz Urquiza, S.C.PricewaterhouseCoopers MéxicoMancera S.C.KPMG Cárdenas Dosal, S.C.
MoroccoDeloitte Touche (M.E)PwCErnst & YoungKPMG
NigeriaAkintola Williams DeloittePwC NigeriaErnst & YoungKPMG
PakistanM. Yousuf Adil Saleem & Co.A. F. Ferguson & Co.Ernst & Young Ford Rhodes Sidat HyderKPMG Taseer Hadi & Co.
PalestineDeloitte Touche (M.E)PwCErnst & Youngnone
PhilippinesNavarro Amper & Co (formerly Manabat Delgado Amper & Co.)Isla Lipana & Co.Sycip Gorres Velayo & Co.R.G. Manabat & Co. ( formerly Manabat Sanagustin & Co.)
RomaniaDeloitte Audit S.R.L., Deloitte Tax S.R.L., Deloitte Consultanta S.R.L., Deloitte Evaluare S.R.L. Deloitte Fiscal Representative S.R.L. and Reff & Associates SCA (jointly referred to as "Deloitte Romania")[16]PricewaterhouseCoopers Audit SRL, PricewaterhouseCoopers Tax Advisors & Accountants SRL, PricewaterhouseCoopers Management Consultants SRL, PricewaterhouseCoopers Business Recovery Services IPURL, PricewaterhouseCoopers Servicii SRL[17]Ernst & Young Romania SRL[18]KPMG Romania S.R.L.[19]
Saudi ArabiaDeloitte & Touche Bakr Abulkhair & CoPricewaterhouseCoopers LLPErnst & Young Saudi ArabiaKPMG Al Fozan & Al Sadhan
South AfricaDeloittePwCEYKPMG
South KoreaAnjin LLCSamil LLCHanyoung LLCSamjong LLC
Sri LankaSJMS Associates (independent correspondent firm)PwCErnst & YoungKPMG
SwedenDeloitte Touche TohmatsuÖhrlings PricewaterhouseCoopersErnst & YoungKPMG
SyriaDeloitte (M.E) - Nassir Tamimi Chartered AccountantPricewaterhousecoopersAbdul Kader Hussarieh and partnersMejanni & Co. Charted Accountants and Consultants LLC
ThailandDeloitte Touche Tohmatsu JaiyosPricewaterhouseCoopersErnst & YoungKPMG Phoomchai
TaiwanDeloittePricewaterhouseCoopers TaiwanErnst & YoungKPMG
TurkeyDRT Bagimsiz Denetim ve S.M.M. A.S.Basaran Nas Bagimsiz Denetim ve SMMM A.S.Güney Bağımsız Denetim ve S.M.M. A.Ş., Kuzey Y.M.M. Denetim A.Ş., Ernst Young Kurumsal Finansman Danışmanlık A.Ş., BEY S.M.M. A.Ş.Akis Bagimsiz Denetim ve S.M.M. A.S.
UzbekistanDeloitte Touche TohmatsuASC PricewaterhouseCoopersEvan Young
VenezuelaLara Marambio & AsociadosEspiñeira Pacheco y Asociados (PricewaterhouseCoopers)KPMG Rodriguez Velasquez y Asociados


  1. ^ a b Mario Christodoulou (2011-03-30). "U.K. Auditors Criticized on Bank Crisis". Wall Street Journal. 
  2. ^ "Deloitte". Retrieved 11 February 2013. 
  3. ^ "PwC". Retrieved 1 October 2013. 
  4. ^ "EY reports 2013 global revenues of US$25.8 billion". Ernst & Young. 
  5. ^ "KPMG International Press Release". KPMG. 
  6. ^ Ernst & Young. "Legal statement". 
  8. ^ Institute of Chartered Accountants in England & Wales: Firms' family trees
  9. ^ Deloitte: Our domestic routes
  10. ^ Alison Leigh Cowan (1989-12-05). "Deloitte, Touche Merger Done". New York Times. 
  11. ^ The Big Four Accounting Firms 2011 Performance Analysis
  12. ^ Lawrence A. Cunningham, "Too Big to Fail: Moral Hazard in Auditing and the Need to Restructure the Industry Before It Fails", Columbia University Law Review.
  13. ^ Big-Four-only clauses are rare: BBA, Accountancy Age, 18 Jun 2010
  14. ^ Adam Jones, "Auditors criticised for role in financial crisis", Financial Times, 30 March 2011
  15. ^ "Appleby and Revenue query work of auditors". Irish Independent. 2011-02-17. 
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  18. ^*memberID_49-members_details.  Missing or empty |title= (help)
  19. ^  Missing or empty |title= (help)

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