It used to be eight, but now four… The widely known Big 4
Accounting firms were once known as the big 8. They are the largest
international professional financial service networks, offering- audit,
assurance, tax, consulting, advisory, actuarial, corporate finance,
& legal services. What then happened, what brought them down to
four?
The Big 8 Accounting firms
• Arthur Andersen
• Arthur Young & co.
• Coopers & Lybrand
• Ernst & Whinney
• Deloitte Haskins & Sells
• Peat Marwick Mitchel
• Price Waterhouse • Touche Ross
Down to BIG SIX
Sequel to the intense competition among these firms for market share, some of the firms deemed it necessary to come together and so to become stronger than before. The year 1989 witnessed 2 mergers;
First was in June when Ernst & Whinney merged with Authur young to form Ernst & Young; Secondly in August, Deloitte, Haskins & Sells merged with Touche Ross to form Deloitte & Touche (subsequently to Deloitte Touche Tohmatsu).
Minus ONE: Down to Five
There was another merger in 1998, this was the time of Price waterhouse and Coopers & Lybrand to marry and become one, consequently giving birth to the well known PricewaterhouseCoopers (PwC).
A GUN SHOT THIS TIME
The Enron scandal in 2001 & the ensuing investigation triggered scrutiny of their financial reporting, which was audited by Authur Andersen. The investigation revealed that Andersen was a privy to the fraud (fraudulent financial reporting); Andersen went further in its involvement by shredding thousands of documents relating to the audit, as well as deleting email correspondence between e firm and Enron.
The firm was convicted and effectively put out of business; the company surrendered its CPA license on August 31, 2002 & 85000 employees lost their jobs.
The conviction was later overturned by the U.S. Supreme court due to the jury not being properly instructed on the charge against Andersen. The supreme court ruling theoretically gave Andersen a second life, however the damage to its name was beyond repair, in effect the firm has not returned as a viable business even on a limited scale.
THE FORTRESS: THE BIG FOUR
The Big Four (Big 4) Public Accounting firms (audit firms) has dominated the sector and are major developers of talent within the financial service industry. The big four accounting firms are massive and employ staff all over the world, with concentration of Head quarters in the United states, UK and the Netherlands. Below are the big four in order of revenue (2013):
REVENUE HEAD QUARTER
1) DTT $ 32.4 bn United states
2) PwC $ 32.1 bn United Kingdom
3) E & Y $ 25.8 bn United Kingdom
4) KPMG $ 23.4 bn Netherlands
• DTT—> Deloitte Touche Tohmatsu
• PwC—> PricewaterhouseCoopers
• E & Y—> Ernst & Young
• KPMG—> Klynveld Peat Marwick Goerdeler
The Big 8 Accounting firms
• Arthur Andersen
• Arthur Young & co.
• Coopers & Lybrand
• Ernst & Whinney
• Deloitte Haskins & Sells
• Peat Marwick Mitchel
• Price Waterhouse • Touche Ross
Down to BIG SIX
Sequel to the intense competition among these firms for market share, some of the firms deemed it necessary to come together and so to become stronger than before. The year 1989 witnessed 2 mergers;
First was in June when Ernst & Whinney merged with Authur young to form Ernst & Young; Secondly in August, Deloitte, Haskins & Sells merged with Touche Ross to form Deloitte & Touche (subsequently to Deloitte Touche Tohmatsu).
Minus ONE: Down to Five
There was another merger in 1998, this was the time of Price waterhouse and Coopers & Lybrand to marry and become one, consequently giving birth to the well known PricewaterhouseCoopers (PwC).
A GUN SHOT THIS TIME
The Enron scandal in 2001 & the ensuing investigation triggered scrutiny of their financial reporting, which was audited by Authur Andersen. The investigation revealed that Andersen was a privy to the fraud (fraudulent financial reporting); Andersen went further in its involvement by shredding thousands of documents relating to the audit, as well as deleting email correspondence between e firm and Enron.
The firm was convicted and effectively put out of business; the company surrendered its CPA license on August 31, 2002 & 85000 employees lost their jobs.
The conviction was later overturned by the U.S. Supreme court due to the jury not being properly instructed on the charge against Andersen. The supreme court ruling theoretically gave Andersen a second life, however the damage to its name was beyond repair, in effect the firm has not returned as a viable business even on a limited scale.
THE FORTRESS: THE BIG FOUR
The Big Four (Big 4) Public Accounting firms (audit firms) has dominated the sector and are major developers of talent within the financial service industry. The big four accounting firms are massive and employ staff all over the world, with concentration of Head quarters in the United states, UK and the Netherlands. Below are the big four in order of revenue (2013):
REVENUE HEAD QUARTER
1) DTT $ 32.4 bn United states
2) PwC $ 32.1 bn United Kingdom
3) E & Y $ 25.8 bn United Kingdom
4) KPMG $ 23.4 bn Netherlands
• DTT—> Deloitte Touche Tohmatsu
• PwC—> PricewaterhouseCoopers
• E & Y—> Ernst & Young
• KPMG—> Klynveld Peat Marwick Goerdeler
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