Services, scope, and powerhouses of the big four accounting firms in the world
The country’s largest accounting firms, also known as the Big Four, provide a full range of audit, assurance, tax, consulting, actuarial, corporate finance and legal services to their clients, including businesses, governments, and non-profit organizations. They are Deloitte, Ernst & Young (EY), KPMG, and PricewaterhouseCoopers (PwC).
The Big Four accounting firms are the largest professional services networks in the world with a combined revenue of $67.8 billion in 2016. They are all headquartered in the United States.
Do you know that roles these audit firms play in your journey of starting or running your business? Share with us in the comments section at the bottom of this Big Four accounting firms blog post.
- 7 reasons why should you care about the big four accounting firms
- Creation of the big four accounting firms
- Criticism of the big four accounting firms
- Specific role of Big Four accounting firms in your business
- Wonderful Wednesday 340
- Source of information on the big four accounting firms
7 reasons why should you care about the big four accounting firms
Do want to actualize your ideas for businesses at home? Then knowledge of the big four accounting business should be part of starting your own business plan.
Are you running a business that is ready for expansion in the next year? You need to know that:
- The Big Four accounting firms are the most successful in the world because of their size and scope.
- The Big 4 firms in accounting offer a comprehensive suite of services.
- The Big Four accounting companies have a global reach.
- The Big 4 consulting firms are able to attract and retain the best talent.
- The Big Four accounting powerhouses have a long history of success.
- The Big 4 accounting firms can adapt to change.
- The Big Four consulting firms are committed to quality.
Creation of the big four accounting firms
The Big 4 accounting firms have been in existence for over a hundred years. The first two accounting firms to be established were Price Waterhouse in London in 1849 and Ernst & Young in New York in 1889. The two firms merged in 1998 to form PricewaterhouseCoopers. KPMG was established in 1897 in Amsterdam, while Deloitte was founded in London in 1845.
Big accounting firms reach
The Big Four accounting firms are all members of the Forum of Firms, an international organization that promotes consistent and high-quality standards of financial reporting and auditing globally. The Forum of Firms is a voluntary organization, and its members are committed to adhering to its quality control standards.
The Big Four accounting consultancy firms are headquartered in London, New York, Amsterdam, and Zurich. They have offices in almost every major city in the world, and employ over 700,000 people. The big four accounting firms salaries are known to be high with generous benefits packages. They are the hub to the top talent in the world of accounting because they are also the four largest employers of accountants and auditors globally.
Even though the Big Four accounting corporations were originally started in the United Kingdom and the United States, they now have a global presence. The big 4 accounting firms locations are found in over 150 countries.
The big four accounting firms ranking
Why are big four accounting firms called big 4? The term was first coined in the late 1980s, when these Deloitte, Ernst & Young, KPMG, and PricewaterhouseCoopers dominated the accounting landscape. Today, the biggest four accounting firms are still the largest professional services networks in the world, but their dominance is no longer as absolute as it once was. In recent years, smaller accounting firms have been making inroads into the big four’s traditional markets and client base.
Nonetheless, the big four accounting conglomerates still hold a commanding lead in terms of size and scope. They are the largest providers of audit, tax, and advisory services in the world, with a combined revenue of $134.3 billion in 2018.
The big four accounting firms are also the most prestigious and sought-after employers in the accounting profession. They attract the best and brightest talent, and their employees enjoy high levels of job satisfaction and career progression despite their well-known rigorous hiring standards.
The top 10 largest accounting firms by ranked by revenue are:
- Deloitte – $59.3 billion
- PwC – $50.3 billion
- EY – $45.4 billion
- KPMG – $32.3 billion
- Binder, Dijke and Otte (BDO) – $11.8 billion
- RSM $7.26 billion
- Grant Thornton – $6.6 billion
- Nexia International $4.5 billion
- Crowe Horwath $ 4.3 billion
- Baker Tilly $4.3 billion
Big four accounting firms cornerstones of the accounting industry
These firms are known for their secrecy and their ability to keep clients’ information confidential. The Big Four professional accounting firms are able to maintain their secrecy because they have a lot to lose if their secrets were to be revealed. If their clients’ information was made public, it could damage the firms’ reputations and cause them to lose business.
Consequently, the firms could be sued for breach of confidentiality or for violating the privacy of their clients.
The Big Four accounting business firms are able to keep their secrets because they have a lot of experience in handling sensitive information. They have teams of lawyers and accountants who are familiar with the laws and regulations surrounding confidentiality and privacy. In addition, the firms have developed policies and procedures to protect their clients’ information.
The services offered by the Big Four accounting multinationals are critical to the functioning of the global economy. They work with businesses of all sizes, from small businesses to large multinational corporations. The big four accounting firms products include other services such as financial advisory and enterprise risk management.
They are also respected for their work in complex financial areas, such as mergers and acquisitions, and for their ability to provide advice on a wide range of issues, from corporate governance to sustainability.
Are the big four accounting firms the leaders in innovation and excellence?
The Big Four firms face increased competition from smaller accounting firms that are providing more specialized services at a lower cost, due to their smaller size and less overhead. These smaller firms are also expanding their operations globally.
Which is your go-to smaller accounting firm than the top four accounting firms?
This is a source of more pressure on the Big Four accounting firms to lower their prices and to improve the quality of their services.
The competitive landscape is changing, and top four accounting firms will need to adapt in order to remain competitive. They may need to focus on providing value-added services, such as unique advisory and consulting services, which are less likely to be provided by smaller firms.
In addition, big 4 finance firms may need to invest in technology and innovation in order to remain ahead of the curve. The big four accounting firms need to invest in their people and their brand to maintain their competitive advantage.
Criticism of the big four accounting firms
Do you use any of the big 4 audit firms?
- The Big Four accounting firms are often criticized for their size and power. Some argue that they have too much influence over the global economy. Others argue that their size makes them too bureaucratic and slow to respond to change.
- The big 4 companies are also criticized for their lack of transparency. For example, PricewaterhouseCoopers is the only firm that does not make its financial statements public.
- The big 4 firms are powerful and influential organizations. They are also controversial. Their size, power, and lack of transparency make them a target for criticism.
- The top 4 accounting firms have been accused of unethical and illegal behavior. In 2009, KPMG was fined $456 million by the U.S. Securities and Exchange Commission for helping clients evade taxes. In 2010, Deloitte was fined $8.5 million by the U.S. Securities and Exchange Commission for similar behavior.
Too expensive and opaque
The Big Four accounting firms are often criticized for being too expensive and for being opaque. Their services can be quite expensive, and it can be difficult to understand what they are doing and how they are doing it. This can be frustrating for small businesses who need accounting help but can’t afford the high costs.
Additionally, the Big Four’s dominance of the accounting industry can make it difficult for new accounting firms to get started.
Being subject to more regulation and scrutiny adds to their costs.
The big four accounting firms under scrutiny
Do business ethics matter to you? Then you should know that the Big Four accounting firms are facing increased scrutiny and regulation in the wake of the global financial crisis. The accounting profession has been under fire in recent years for its role in the financial crisis, and big 4 consulting companies have been at the center of much of the criticism.
The firms are now facing increased regulation from both the US and European Union, as well as calls for them to be broken up. The big 4 consulting firms have come under particular scrutiny for their role in auditing the financial statements of companies like Lehman Brothers and Bear Stearns.
Some critics have argued that the firms should have been more aggressive in flagging potential problems at these companies. The firms have defended their actions, saying that they were following generally accepted accounting principles.
The increased scrutiny of big 4 audit firms is likely to lead to more regulation of the accounting profession. This could include new rules governing how audits are conducted and greater transparency around the fees that firms charge for their services.
The Big Four accounting firms have been embroiled in a number of scandals in recent years. The most notable of these was the Enron scandal, in which the accounting firm Arthur Andersen was accused of shredding documents and destroying evidence in an attempt to cover up Enron’s fraudulent activities. Andersen was later convicted of obstruction of justice, and the Enron scandal led to the demise of the accounting firm.
In more recent years, the Big Four accounting firms have been accused of involvement in the subprime mortgage crisis and the Bernard Madoff scandal. In the case of the subprime mortgage crisis, the accounting firms were accused of giving their seal of approval to financial statements that misrepresented the true risks involved in subprime mortgages. For the case of Bernard Madoff, the accounting firms were accused of turning a blind eye to Madoff’s fraudulent activities.
The string of scandals involving the Big Four accounting organizations has led to calls for reform of the accounting industry. Some have suggested that the accounting firms should be subject to stricter regulation, while others have called for the breakup of the Big Four accounting firms. However, it remains to be seen whether any meaningful reform will be enacted in the wake of the scandals.
Despite these challenges, the Big Four accounting firms continue to be the go-to source for many businesses and organizations around the world.
Specific role of Big Four accounting firms in your business
The Big Four accounting firms play an important role in the journey of starting your business.
They can help you with the financial planning and analysis you need to get your business off the ground. They can also provide you with the accounting and tax services you need to keep your business running smoothly. Notwithstanding, they can help you with any legal or regulatory compliance issues you may have.
The Big Four accounting firms can provide you with important financial and tax advice, – if you are running your own business – help you to set up your accounting and bookkeeping systems, and prepare your financial statements. They can also help you to obtain financing, and to negotiate and structure business deals.
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Source of information on the big four accounting firms
- U.S. watchdog levies $7.7 mln in fines against KPMG entities – Reuters
- Cost to break Big Four dominance rises to £1bn – Accountancy Today
- SEC probing Big Four accounting firms over conflict-of-interest concerns: report – The Hill
- Big Four accounting firms come under regulator’s scrutiny – Fox Business
- Big Four Shunned SPAC IPOs But Now Flock to Audit New Companies – Bloomberg Law
- Leading accounting firms in the United States from 2020 to 2021, by revenue – Statista
- Big Four among biggest employers of recent college grads – CPA Practice Advisor
- Which university gives you the best chance of working for a Big Four accounting firm? – SME Web
- Big Four auditors up advisory fee incomes as challengers capture larger share of audit work – City A.M.
- Big Four Invest Billions in Tech, Reshaping Their Identities – Bloomerberg Tax
- Are The Big Four Accounting Firms and Grant Thornton as Great as they Seem? – The Commentator
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