Big four

The Big Four is the name of the world's four largest accounting networks which in particular provides auditing and consulting services. This specific «Four» includes such companies :

• Deloitte;
• Ernst & Young;
• KPMG;
• PricewaterhouseCoopers.

These networks are united in the big four because they are approximately equal in such aspects as income, quality of service provision, attractiveness among young people who want to build a career in the provision of services that are related to various economic sciences, namely audit, theoretical and practical consulting, accounting, economic analytics .

The history of association

Everything began in 1910. When did not exist the four accounting companies, were the eight huge accounting organization which satisfied people's needs in this economic category. The ones made up the unity which was known as the Big Eight. They were such firms :

1. Arthur Andersen
2. Arthur Young
3. Coopers and Lybrand
4. Deloitte Haskins & Sells
5. Ernst & Whinney
6. Peat Marwick Mitchell
7. Price Waterhouse
8. Touche Ross

Before the emergence of the Big Eight, there were mainly small companies that also engaged in audit, consulting, and accounting, but they did not have any ties. However, in the 19th century, most successful American and British organizations began to expand and enter new international markets, which required a small accounting firm to merge with the purpose to serve the needs of such large clients. As a result, the Big Eight was formed, which dealt with the affairs of large corporations .

Years passed. The companies worked together as a single mechanism towards the end of the 20th century. It was by the end of this century that competition among large firms increased. One of the Big Eight companies, namely Peat Marwick Mitchell, decided that it should become better than its competitors and suggested that another company (Klynveld Main Goerdeler) from this community merge and form a new company, which is still part of the Big Four - KPMG . But this was not the end, but only the beginning of the new unions such as the Big Seven, the Big Six, Big Five, and finally the Big Four. All of these association was created through a merger between the members of the Big Eight .

Revenue comparison in 2020

Firm	Fiscal year ending	Revenues (US$, bn)	Years (Footnotes)
Deloitte	31.05.2020	47,6	2020
PricewaterhouseCoopers	30.06.2020	43,0	2020
Ernst & Young	30.06.2020	37,2	2020
KPMG	30.09.2019	29,8	2019

The table Revenue comparison in 2020 shows that Deloitte is ranked first of all the Big Four in terms of revenue. Also, according to the data indicated on official Deloitte's website, revenue grew by 3% compared to 2019 . Besides, according to the data, absolutely all companies were able to increase the level of profits, albeit in a different percentage. The last place was taken by KPMG company, but despite this, this does not deprive it of the right to be called one of the best.

Today's Big Four realities

In recent days, the Big Four companies earn more money from consulting services than from their other functions. The main reason for this fact is that the business has changed and knowledge of relevant information for making effective management decisions is more important than, for example, accounting, which becomes more automated every day. The development in the use of artificial intelligence and special software for paying taxes leads to the fact that soft skills of a person become more important than hard skills because the latter are quietly replacing computers, other machines, and robots .

However, despite the growth of automation, professionals who work in the financial departments of the Big Four are required to understand the latest and the most modern programs related to accounting, financial planning, taxes, auditing, and other sciences to maintain a leader's position in the international market. That is why in such companies as Deloitte, Ernst & Young, KPMG, and PricewaterhouseCoopers are very difficult to get a job. For example, a large number of young people who dream of working at Deloitte and want to start their career with an internship there must not only send their resume and pass an interview, but also must pass such tests as a numerical test, psychological test, and the test of English, which includes such parts as speaking, grammar, reading, writing and listening. If any of these tests do not pass, unfortunately, this candidate will not be accepted for this vacancy .

Examples of Big four

1. Deloitte

Deloitte is a global professional services firm that provides audit, tax, consulting, financial advisory, and risk advisory services to clients in more than 150 countries. Deloitte is one of the Big Four accounting networks and is the largest professional services network in the world. With over 286,000 employees, Deloitte is known for its strong focus on quality and customer service. Deloitte has a diverse client base, including multinational corporations, government agencies, and small and medium-sized businesses. Deloitte has been recognized for its commitment to sustainability and corporate social responsibility, and has been named one of the "World’s Most Admired Companies" by Fortune magazine.

1. PwC

PwC is a global professional services firm that provides audit, tax, consulting, financial advisory, and risk advisory services to clients in more than 150 countries. PwC is one of the Big Four accounting networks and is the second largest professional services network in the world. With over 276,000 employees, PwC is known for its strong focus on quality and customer service. PwC has a diverse client base, including multinational corporations, government agencies, and small and medium-sized businesses. PwC has been recognized for its commitment to sustainability and corporate social responsibility, and has been named one of the "World’s Most Admired Companies" by Fortune magazine.

1. KPMG

KPMG is a global professional services firm that provides audit, tax, consulting, financial advisory, and risk advisory services to clients in more than 150 countries. KPMG is one of the Big Four accounting networks and is the third largest professional services network in the world. With over 200,000 employees, KPMG is known for its strong focus on quality and customer service. KPMG has a diverse client base, including multinational corporations, government agencies, and small and medium-sized businesses. KPMG has been recognized for its commitment to sustainability and corporate social responsibility, and has been named one of the "World’s Most Admired Companies" by Fortune magazine.

1. EY

EY is a global professional services firm that provides audit, tax, consulting, financial advisory, and risk advisory services to clients in more than 150 countries. EY is one of the Big Four accounting networks and is the fourth largest professional services network in the world. With over 250,000 employees, EY is known for its strong focus on quality and customer service. EY has a diverse client base, including multinational corporations, government agencies, and small and medium-sized businesses. EY has been recognized for its commitment to sustainability and corporate social responsibility, and has been named one of the "World’s Most Admired Companies" by Fortune magazine.

Advantages of Big four

The Big Four accounting networks are the world’s largest and most reputable accounting firms. They provide a wide range of auditing and consulting services to a global clientele. The Big Four include Deloitte, PwC, KPMG, and EY. The following are some of the advantages of working with the Big Four:

• Global Reach: The Big Four have an extensive global network of professionals and offices, allowing them to provide services to clients in virtually any country or region.
• Expertise: The Big Four employ some of the most experienced and highly qualified professionals in the industry. They have deep knowledge and expertise in a wide range of areas, including auditing, consulting, and tax services.
• Reputation: The Big Four are known for their trustworthiness and commitment to ethical standards. Their reputation and brand recognition allow them to attract the best talent and clients.
• Resources: The Big Four have the resources to handle large and complex projects. They have the ability to invest in technology and other resources necessary to provide a high-quality service.
• Accountability: The Big Four are subject to stringent regulations and oversight, ensuring that their services are reliable and of the highest quality. They are also accountable for their actions and must adhere to strict ethical standards.

Limitations of Big four

The Big four accounting networks provide auditing and consulting services for companies around the world. However, there are a number of limitations to these networks that should be considered before deciding to use them. These limitations include:

• Cost: The Big four can be expensive, with their services costing significantly more than those of smaller accounting firms.
• Limited services: Although the Big four offer a wide range of services, some services are not yet available within their networks.
• Global reach: The Big four are global networks, but they may not have coverage in some countries or regions.
• Reputation: Although the Big four are well-known, their reputation is not always positive and they can be seen as part of the "establishment".
• Independence: The Big four may not be as independent as smaller firms, and may be seen as too close to their clients.
• Concentration of risk: The Big four may be too large and interconnected, making them more vulnerable to systemic risk.

Other approaches related to Big four

The Big Four refers to the world's four largest accounting networks that provide auditing and consulting services: Deloitte, PwC, EY, and KPMG. However, there are other approaches related to the Big Four which include:

• Outsourcing: Many organizations outsource their accounting, tax, and audit functions to one of the Big Four in order to benefit from their expertise and resources.
• Mergers and Acquisitions: The Big Four are also involved in mergers and acquisitions between companies. They provide consulting services to help the companies assess the potential benefits of the transaction and complete the deal.
• Corporate Finance: The Big Four also provide corporate finance services including debt and equity financing, capital structure advice, and valuations.
• Risk Management: The Big Four also provide risk management services to organizations, helping them identify, assess, and mitigate risks.

In summary, the Big Four accounting networks offer a wide range of services to organizations beyond the traditional auditing and consulting services. These services provide businesses with valuable guidance on a range of topics, from risk management to corporate finance.

Footnotes

Big four — recommended articles

Alfred Sloan — Land agent — Chartered wealth manager — Small enterprise — Advertising agency — Market Challenger — Law firm — Disruptive business model — Large organizations

References

• Bhaskar Krish, Flower John (2019) Disruption in the Audit Market: The Future of the Big Four, Published by Routledge, Abigndon, and by Routledge, New York, p.4-12
• Kells Stuart, Gow Ian D. (2018) The Big Four: The Curious Past and Perilous Future of the Global Accounting Monopoly, Published by La Trobe University Press in conjunction with Black Inc., Australia, p.9-22
• Shore Cris, Wright Susan (2018) How the Big 4 got big: Audit culture and the metamorphosis of international accountancy firms, Published in the University of Auckland, New Zealand, and the University of Aarhus, Denmark, p.14-18

Author: Anna Sobolieva