Big Four

Big Four refers to the top four accounting firms globally that audit more than 80% of US public companies, including Deloitte, PricewaterhouseCoopers, KPMG, and Ernst & Young. For these accounting firms, this term is used because of its huge size, good reputation, and worldwide reach in the field.

Although the big four accounting firms are usually identified as a single company, each one of these has a network of different independent corporations who, by entering into agreements, work with each other with the decided quality standards and a common name.

1. This term is applied to these accounting companies because of their enormous size, stellar reputation, and extensive global reach.
2. Each accounting firm has a network of many distinct corporations, even though these businesses are typically called single entities.
3. These accounting businesses offer various services so clients can access them all in one location. Additionally, because these companies have a wide range of clients, they may make better selections than others based on their prior interactions with clients.
4. These great four titans were involved in massive frauds that caused enormous suffering to the owners of companies and the investors of funds, even though they had access to inside information about the businesses and various resources.

Big four, also known as the final 4, comprises the four largest accounting and professional services firms with an international presence. For the majority of publicly traded companies, auditing work is being performed by these big four firms. These include Deloitte, PricewaterhouseCoopers, KPMG, and Ernst & young. Apart from these, several other firms provide a similar types of services but are small compared to them.

Moving into the big four history brings one to the big eight firms that existed in the past and got reduced to the big four firms when the consolidations happened between the 1990s and the early 2000s. The consolidations which took place and led to the rise of the big four are as follows:

• Arthur, young with Ernst & Whinney.
• Price Waterhouse with the Coopers & Lybrand.
• Deloitte Haskins sells with the touché Ross Tohmatsu.
• On Arthur Andersen, many lawsuits for audit malfeasance were put due to which it went out of business forcibly.

For many large public companies, auditing work is being performed by these top firms.

The big four companies that fall under this category are as follows:

#1 - Deloitte

Deloitte is also known as the Deloitte Touché Tohmatsu Limited. The company is incorporated in the UK as an international firm for audit services. The company began working as separate companies of four-person names as William Deloitte, Elijah Sells, Charles Haskins, and George Touche, out of which three companies merged and became Deloitte & Touche.

Presently the company is primarily known as Deloitte LLP having four subsidiaries named Deloitte & Touche LLP, Deloitte financial advisory services LLP, Deloitte Consulting LLP, and Deloitte Tax LLP. Over the period, Deloitte bought out many companies and created them as its subsidiaries or merged them and became one of the biggest firms in the world, offering a wide range of employment opportunities. A person looking for a job at Deloitte can be in any category like consulting, tax advisory, financial advisory services, etc.

#2 - Pricewaterhouse Coopers (PwC)

The Price water house Coopers (PwC) headquarters is situated in London and was founded in 1849 by Samuel Lowell Price. A large selection of services is being offered by PricewaterhouseCoopers to their clients, which includes auditing and assurance, consulting, tax-related matters, IFRS reporting, etc. All these provide a great opportunity for the current and potential employees to work in different areas and find out their specialty within the same company.

#3- Klynveld Peat Marwick Goerdeler (KPMG)

KPMG is also known as the Klynveld Peat Marwick Goerdeler. It was established originally in the year 1911 as, at that time, two companies merged and formed Peat Marwick. Three primary services are being offered by KPMG, namely auditing, advisory services, and taxes. These three services can be broken into many sub-services, thereby making KPMG a full-service firm. KPMG prioritizes building a culture that rewards a high level of performance and nurtures talent.

#4 - Ernst & Young (EY)

Ernst & Young, also sometimes referred to as EY, is another international accounting firm out of four firms of the big four, having its headquarters in London. EY was formed by the merger of two companies, namely Ernst & Ernst and the Arthur Young company, in 1989. The company is located in various countries, counts more than 150, and has more than 700 offices worldwide. They offer multiple services, including auditing and assurance, tax matters, advice, transactions, etc.

• As the big fours offer various services in different areas, it allows the employees and potential employees to work in diversified fields. Also, they can find a specialty in working with the same company.
• These accounting firms provide different types of services to the clients so that the clients can avail of the various services at the same place. Also, as there is a broad base of clients with these firms, they can provide more informed decisions than others using their past experiences with their clients.
• Offering a wide range of services helps the company cater to a diverse group of employees.

• Even though they have various resources and inside access to the companies, these big four giants were involved in massive frauds, which have caused massive pain to the shareholders of companies and the investors of funds.
• Sometimes, these firms don’t ask too many questions and don’t report the suspected things in their report for fear of losing the clients.

Recently, Ernst & Young (EY), one of the big four companies, approved a plan, stating its wish to split the final four. According to the leaders, the audit firm has the capability to prosper and grow faster as a separate entity. Hence, this decision has been made.

Besides the big four, there are the big three companies too that enjoy a dominant status in the market. Let us check how these two amalgamations differ:

This has been a guide to what is Big Four. Here we explain the split of it recently along with vs big three, and the list of firms that constitute the Big 4. You can learn more about accounting from the following articles –

• Accounting Firms in US
• Accounting Firms in Canada
• List of Accounting Firms in Australia
• Accounting Firms in Singapore
• Controller vs Comptroller