Accountings Big Four
In Accounting there are four large firms, Deloitte & Touche, Ernst & Young, KPMG, and
PricewaterhouseCoopers, that keep the books for 98% of American companies. They all provide audit,
advisory, and tax services to their clientele. False accounting claims have led to numerous lawsuits
against all of the Big Four, causing possible clients to seek other accounting means. They are also all at
risk from competition due to the easing regulatory restrictions. The Big Four share many qualities for
their success, as well as their failings, but each company possesses independent qualities as well.
PricewaterhouseCoopers (PwC) is known as the leader amongst the Big Four. Their main global
presence is located in Western Europe and they boast 749 offices in 153 countries with over 155,600
employees. They can also brag about an extremely strong clientele list that includes companies such as
J.P Morgan Chase, ExxonMobil, Ford Motor, GlaxoSmithKline, AT&T, Sony, and Walt Disney Company.
PwC generates about 50% of its revenue through assurances.
Deloitte & Touche (D&T) is headquartered in New York and features 68 member firms with
presences spread across 140 countries and employ over 169,000 personnel. D&T has been able to grow
within its strategic markets, doubling in China and tripling in size in India. They have added many large
companies such as Drivers Jonas, the United Kingdom’s oldest property advisory firm, and Pathfinder
Solutions, Australia’s leader in marketing and business insights specialist boutique firm. Even with this
they still have a weak existence in the business process outsourcing when compared to their
competitors.
Ernst & Young (E&Y) is also located in New York and reports 700 office locations in 140 countries.
They maintain a work force of more than 144,000 and generate a large portion of revenues from the US.
E&Y has a positive relationship with the US government which resulted in their firm acquiring employment
by assisting the US treasury in implementing the $700 billion bale out plan. On the bad side E&Y is
strongly linked to the Fortune 500 and many companies here are failing, like FannieMae, or faltering, like
Lehman Brothers, which results in the loss of large audit accounts.
KPMG is headquartered in Amstelveen, Netherlands and operates in over 150 countries, primarily
in Europe, the Middle East, and Africa. They employ about 137,835 people. They have a strong
relationship with the European Commission, which resulted in KPMG being selected as the first provide in
the EC’s research and technological development program. Like E&Y they are too closely linked to the
Fortune 500 and are affected by its difficulties. Another possible hardship is that many clientele may be
driven away from the private company to a public competitor because of the lack of public information
about KPMG’s financial standings.
The Big Four may all see some future revenues due to the adoption of International Financial
Reporting Standards (IFRS). The changes are set to be complete by 2014 and should give a large
increase in demand for accounting and auditing services. These changes may bring good news to the Big
Four unless they can’t manage to damn up the flood of scandals that has brought doubt to the global
market. The changes may only prove to assist the competitors who will be made through the
governments forcing the Big Four to break apart there companies. In short the future of the Big Four is
still uncertain no matter how global or promising the financial situation may be. Their only hope of
maintaining is to return to an honest accounting method and higher accuracy standard.