Big Four (audit firms)

From Wikipedia, the free encyclopedia

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 leadingmidcap listing companies.[1] The Big Four firms are shown below, with their latest publicly available data.
Fir
m

Revenue
s

Employee
s

Revenue per
employee

Fiscal
year

Headquarter
s

Sourc
e

Deloitt
e

$35.2
billion

225,400

$156,167

2015

United States

[2]

PwC

$34.0
billion

195,000

$174,359

2014

United
Kingdom

[3]

EY

$28.7
billion

212,000

$135,517

2015

United
Kingdom

[4]

KPMG

$26.5
billion

162,000

$153,209

2014

Netherlands

[5]

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.
Contents
[hide]

1 Legal structure

2 Mergers and the big auditors

o

2.1 Big Eight

2.2 Big Six

2.3 Big Five

2.4 Big Four

2.5 Branding List

3 Policy issues concerning industry concentration

4 Global member firms

5 See also

6 References

7 External links

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

Arthur Andersen (until its closure in 2002 for a conviction related to

the Enron scandal which was later overturned by the US Supreme
Court)[7]

Coopers & Lybrand (until 1973 Cooper Brothers in the UK and

Lybrand, Ross Bros., & Montgomery in the United States)

Ernst & Whinney (until 1979 Ernst & Ernst in the United States and
Whinney Murray in the UK)

Deloitte Haskins & Sells (until 1978 Haskins & Sells in the United
States and Deloitte & Co. in the UK)

Peat Marwick Mitchell (later Peat Marwick, then KPMG)

Price Waterhouse

Touche Ross

Arthur Young

Most of the Big Eight 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 Six[edit]
Competition among these firms intensified and the Big 8 became the Big Six 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.

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

Big Four[edit]

The Enron collapse and ensuing investigation prompted scrutiny of their financial reporting, which
was audited by Arthur Andersen. Arthur Andersen was eventually 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 Fournotably Ernst &
Youngglobally; 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 SarbanesOxley Act into law in the US. It aims to enforce strict
compliance to rules for 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]

Branding List[edit]
A year at the end indicates year of formation through merger or adoption of single brand name.

Arthur Andersen (1913-2001)

EY (1989) (Ernst & Young until 2013)

Arthur Young (1906)

Ernst & Whinney (1979)

Ernst & Ernst (US) (1903)

Whinney, Smith & Whinney (UK) (1849)

PwC (1998) (PricewaterhouseCoopers until 2010)

Coopers & Lybrand (1973)

Cooper Brothers (UK) (1854)

Lybrand, Ross Bros, Montgomery (US) (1898)

Price Waterhouse (US) (1849)

Deloitte Touche Tohmatsu (1989) (Deloitte & Touche until 1993)

Deloitte Haskins & Sells (1978)

Deloitte & Co. (UK)

Haskins & Sells (US)

Touche Ross (1975)

Touche Ross (1960) (Touche, Ross, Bailey & Smart until

1969)

Ross (Canada)

George A. Touche (UK)

Touche, Niven, Bailey & Smart (US) (1947)

Touche Niven (1900)

Bailey & Smart (1947)

Tohmatsu & Co. (Japan) (1968)

KPMG (1987) (KPMG Peat Marwick before 1995)

Peat Marwick (1925) (originally Peat Marwick Mitchell)

William Barclay Peat (UK) (1870)

Marwick Mitchell (US) (1897)

Edwin Gurthie (1875-1955)

Beevers & Adgie (1849-1967)

KMG (1979) (officially Klynveld Main Goerdeler)

Klynveld Kraayenhof (Netherlands) (1917)

McLintock Main Lafrentz (1964)

Thomson McLintock (UK) (1877)

Martin Farlow (1882-1968)

Grace Ryland (1967-1969)

Grace, Darbyshire, & Todd (1818)

CJ Ryland (1910)

Main Lafrentz (US) (c.1880)

Deutsche Treuhand-Gesellschaft (Germany) (1890)

Armitage & Norton (1869-1987)

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]

This section needs additional citations for verification. Please help improve this
article by adding citations to reliable sources. Unsourced material may be challenged and
removed. (April 2009)
Region

Deloitte Touche
Tohmatsu

Australia

Deloitte Australia[16] PricewaterhouseCoopers

Ernst & Young KPMG

Argentina

Deloitte & Co.

S.R.L

Pricewaterhouse & Co. S.R.L.

Ernst & Young KPMG

Banglades
h

None

Hoda Vasi Chowdhury & Co

A. Qasem &
Co

Rahman
Rahman Haq

Brazil

Deloitte

PwC

EY

KPMG

China

Deloitte Hua Yong

PricewaterhouseCoopers Zhong Tian

Ernst & Young KPMG Hua

PwC

Ernst &
Young

KPMG

Region

Deloitte Touche
Tohmatsu

PwC

Ernst &
Young

KPMG

Hua Ming

Zhen

Hazem Hassan

Egypt

Kamel Saleh

Mansour & Co.

Allied for
Accounting
and Auditing
(Emad
Ragheb)

El
Salvador

DTT El Salvador,
S.A. de C.V.

PricewaterhouseCoopers El Salvador

Ernst & Young

El Salvador,
KPMG, S.A.
S.A. de C.V.

Finland

Deloitte & Touche

Oy

PricewaterhouseCoopers Oy

Ernst & Young

KPMG Oy Ab
Oy

Ghana

Deloitte

PwC

EY

Hong
Kong

Deloitte

PricewaterhouseCoopers

Ernst & Young KPMG

India

Deloitte 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
Services

Price Waterhouse, Price Waterhouse

& Co., Lovelock & Lewes, and Dalal
& Shah, PricewatershouseCoopers,
PricewaterhouseCoopers Service
Delivery Centre

S.R.Batliboi &
Co. LLP,
S.R.Batliboi &
Associates
LLP,
S.V.Ghatalia
& Associates
LLP, S R B C
& CO LLP,
Ernst & Young
LLP, PDS
Legal

KPMG

BSR & Co
LLP, BSR &
Associates
LLP, BSR And
Company,
BSR & Co.,
BBSR and
Co., BSSR &
Co., BSR And
Associates,
Advaita Legal,
SMA &
Associates

Region

Deloitte Touche
Tohmatsu

Indonesia

KAP Osman Bing

Satrio & Eny

Israel

Deloitte Brightman
Almagor Zohar

Italy

Deloitte Touche
Tohmatsu

Japan

Deloitte Touche
Tohmatsu
Kansa Houjin
Tohmatsu

PwC

Ernst &
Young

KPMG

KAP Tanudiredja, Wibisana & Rekan

KAP
Purwantono,
Suherman &
Surja

KAP Sidharta
dan Widjaja

Kesselman & Kesselman, PwC Israel

Kost, Forer,
Gabbay &
Kasierer
(Ernst &
Young Israel)

KPMG
Somekh
Chaikin

PricewaterhouseCoopers

Reconta Ernst
& Young SpA,
Ernst & Young
KPMG
Financial
Business
Advisors SpA,

PricewaterhouseCoopers Aarata
Aarata Kansa Houjin
PricewaterhouseCoopers Kyoto

Ernst & Young

ShinNihon
LLC
ShinNihon
Yugen-sekinin
Kansa Houjin

KPMG AZSA
LLC (formerly
KPMG AZSA
& Co.)
Azsa Kansa
Houjin

Jordan

Deloitte Touche
(M.E)

PwC

Ernst & Young KPMG

Kazakhsta
n

Deloitte

PwC

EY

Kenya

Deloitte & Touche

(E.A)

PwC

Ernst & Young KPMG

Kyrgyzsta
n

Deloitte

EY

Lebanon

Deloitte Touche
(M.E)

PwC

Ernst & Young KPMG PCC

Malaysia

Deloitte
KassimChan

PricewaterhouseCoopers

Ernst & Young KPMG

Mexico

Galaz, Yamazaki,
Ruiz Urquiza, S.C.

PricewaterhouseCoopers Mxico

Mancera S.C.

Morocco

Deloitte Touche

PwC

Ernst & Young KPMG

KPMG

KPMG

KPMG
Crdenas
Dosal, S.C.

Region

Deloitte Touche
Tohmatsu

PwC

Ernst &
Young

KPMG

(M.E)
Nigeria

Akintola Williams
Deloitte

PwC Nigeria

Ernst & Young KPMG

Pakistan

Deloitte Yousuf
Adil

A. F. Ferguson & Co.

Ernst & Young

KPMG Taseer
Ford Rhodes
Hadi & Co.
Sidat Hyder

Palestinian
Territories

Deloitte Touche
(M.E)

PwC

Ernst & Young none

Peru

DELOITTE &
TOUCHE SRL

PRICEWATERHOUSECOOPERS
S.CIVIL DE R.L.

ERNST &
YOUNG SRL

KPMG SAC

Navarro Amper &

Co (formerly
Philippines
Manabat Delgado
Amper & Co.)

Isla Lipana & Co.

Sycip Gorres
Velayo & Co.

R.G. Manabat
& Co.
(formerly
Manabat
Sanagustin &
Co.)

Poland

Deloitte

PwC

EY

KPMG

Romania

Deloitte 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")[17]

PricewaterhouseCoopers Audit SRL,

PricewaterhouseCoopers Tax Advisors
& Accountants SRL,
PricewaterhouseCoopers Management Ernst & Young KPMG
Consultants SRL,
Romania
Romania
PricewaterhouseCoopers Business
SRL[19]
S.R.L.[20]
Recovery Services IPURL,
PricewaterhouseCoopers Servicii
SRL[18]

Saudi
Arabia

Deloitte & Touche

Bakr Abulkhair &
Co

PricewaterhouseCoopers LLP

KPMG Al
Ernst & Young
Fozan & Al
Saudi Arabia
Sadhan

South
Africa

Deloitte

PwC

EY

KPMG

South
Korea

Anjin LLC

Samil LLC

Hanyoung
LLC

Samjong LLC

Sri Lanka

SJMS Associates
(independent
correspondent
firm)

PwC

Ernst & Young KPMG

Sweden

Deloitte Touche

hrlings PricewaterhouseCoopers

Ernst & Young KPMG

Region

Deloitte Touche
Tohmatsu

PwC

Ernst &
Young

KPMG

Tohmatsu

Syria

Deloitte (M.E) Nassir Tamimi

Chartered
Accountant

PricewaterhouseCoopers

Abdul Kader
Hussarieh and
partners

Mejanni & Co.

Chartered
Accountants
and
Consultants
LLC

Thailand

Deloitte Touche
Tohmatsu Jaiyos

PricewaterhouseCoopers

Ernst & Young

KPMG
Phoomchai

Taiwan

Deloitte

PricewaterhouseCoopers Taiwan

Ernst & Young KPMG

Turkey

DRT Bagimsiz
Denetim ve
S.M.M. A.S.

Basaran Nas Bagimsiz Denetim ve

SMMM A.S.

Gney
Bamsz
Denetim ve
S.M.M. A..,
Kuzey Y.M.M.
Denetim A..,
Ernst Young
Kurumsal
Finansman
Danmanlk
A.., BEY
S.M.M. A..

Uzbekistan

Deloitte Touche
Tohmatsu

ASC PricewaterhouseCoopers

Evan Young

Venezuela

Lara Marambio &

Asociados

Espieira Pacheco y Asociados

(PricewaterhouseCoopers)

Uganda

Deloitte

PwC

EY

KPMG

Zimbabwe

Deloitte

PwC

EY

KPMG

Akis Bagimsiz
Denetim ve
S.M.M. A.S.

KPMG
Rodriguez
Velasquez y
Asociados

See also[edit]

Luxembourg leaks

References[edit]
1.

^ Jump up to:a b Mario Christodoulou (2011-03-30). "U.K. Auditors

Criticized on Bank Crisis". Wall Street Journal.

2.

Jump up^ http://www2.deloitte.com/global/en/pages/aboutdeloitte/articles/global-report-2015.html

3.

Jump up^ PricewaterhouseCoopers. "Global Annual Review 2014:

Facts and figures: PwC". PwC.

4.

Jump up^ http://www.ey.com/GL/en/Newsroom/Newsreleases/News_EY-reports-2013-global-revenues-of-US-25-8-billiondollars#.U3k3mfldXEg

5.

Jump
up^ http://www.kpmg.com/Global/en/IssuesAndInsights/ArticlesPublic
ations/Press-releases/Pages/kpmg-achieves-fy13-globalrevenues.aspx

6.

Jump up^ http://www.ey.com/GL/EN/home/legal

7.

Jump up^ ARTHUR ANDERSEN LLP, PETITIONER v. UNITED

STATES 544 U.S. 696

8.

Jump up^ "What's in a name: Firms' simplified family trees on the

web". icaew.com.

9.

Jump up^ http://www.deloitte.com/dtt/article/0,1002,cid

%253D12279,00.html

10. Jump up^ Alison Leigh Cowan (1989-12-05). "Deloitte, Touche

Merger Done". New York Times.
11. Jump up^ "2013 Big Four Analysis". Big4.com.
12. Jump up^ "Too Big to Fail: Moral Hazard in Auditing and the Need to
Restructure the Industry Before it Unravels". ssrn.com.
13. Jump up^ "Big-Four-only clauses are rare:
BBA". accountancyage.com.
14. Jump up^ "Auditors criticised for role in financial crisis". Financial
Times.
15. Jump up^ http://www.independent.ie/business/irish/appleby-andrevenue-query-work-of-auditors-2544309.htm
16. Jump up^ http://www2.deloitte.com/au/en/pages/aboutdeloitte/articles/about-deloitte-australia.html
17. Jump up^ http://www.deloitte.com/view/en_RO/ro/about/index.htm
18. Jump up^ PricewaterhouseCoopers. "About site provider". PwC.
19. Jump up^ "Members :: CCE-R". ccer.ro.
20. Jump up^ "Home - KPMG - RO". kpmg.com.

External links[edit]

Official website Deloitte

Official website Ernst & Young

Official website PriceWaterhouseCoopers

Official website KPMG

International Consortium of Investigative Journalists, Big 4 Audit

Firms Play Big Role in Offshore Murk,

G8 And Tax Avoidance - Spinwatch Exclusive on the role of the Big

Four in lawmaking
[hide]

Big Four auditors

Deloitte
Ernst & Young
KPMG
PwC

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Systemic risk

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