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 [1]:
- 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 [2]:
- Arthur Andersen
- Arthur Young
- Coopers and Lybrand
- Deloitte Haskins & Sells
- Ernst & Whinney
- Peat Marwick Mitchell
- Price Waterhouse
- 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 [3]. 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 [4].
Revenue comparison in 2020
| Firm | Fiscal year ending | Revenues (US$, bn) | Footnotes | |
|---|---|---|---|---|
| Deloitte | Example | Example | Example | |
| PwC | Example | Example | Example | |
| EY | Example | Example | Example | |
| KPMG | Example | Example | Example |
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 [5].
Footnotes
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
