Big Four auditors

The Big 4 (or the Big Four) is a group of international accountancy and professional services firms that handle the vast majority of audits for publicly traded corporations. Member firms of the Big Four can trace their history back to Europe.

'In order of revenue and headcount as of 2005, the Big 4 are:

PricewaterhouseCoopers $20.3bn +17%
Deloitte $18.2bn +12%
Ernst & Young $16.9bn +16%
KPMG $15.7bn +16% '

The previous listing once included Arthur Andersen, the smallest firm of The Big Five. This firm was convicted of obstruction of justice in the wake of the 2001 Enron scandal. This conviction effectively ended the firm's ability to audit public companies. On May 31, 2005, the United States Supreme Court unanimously overturned the conviction.

The Big gets Bigger

Since 1989, mergers have reduced the number of major accountancy firms from eight to four.

Big 8 (1970s-1989)

The firms were called the Big 8 in the 1970s and 1980s, reflecting the international dominance of the eight largest accounting firms:

Arthur Andersen
Arthur Young & Company
Coopers & Lybrand
Ernst & Whinney (formerly Ernst & Ernst)
Haskins & Sells (merged with European firm to become Deloitte, Haskins and Sells)
KPMG (formed by merger of Peat Marwick International and KMG Group)
Price Waterhouse
Touche Ross

The Big 8 themselves were the results of earlier mergers.

Big 6 (1989-1998)

Competition among these public accounting firms intensified and the Big 8 became the Big 6 in 1989 when Ernst & Whinney merged with Arthur Young to form Ernst & Young in June, and Deloitte, Haskins & Sells merged with Touche Ross to form Deloitte & Touche in August.

Confusingly, in the United Kingdom the local firm of Deloitte, Haskins & Sells merged instead with Coopers & Lybrand. For some years after the merger, the merged firm was called Coopers & Lybrand Deloitte and the local firm of Touche Ross kept its original name. In the mid 1990s however, both UK firms changed their names to match those of their respective international organisations.

Big 5 (1998-2002)

The Big 6 became the Big 5 in July 1998 when Price Waterhouse merged with Coopers & Lybrand to form PricewaterhouseCoopers.

Big 4 (2002-)

The second firm of the Big Five, Arthur Andersen, was indicted for falsifying the finanical statements of Enron, covering up millions of dollars in losses in the 2001 Enron scandal. The resulting conviction, since overturned, has effectively meant the end of the line for Arthur Andersen. Most of its country practices around the world have sold to members of what is now the Big Four, notably Ernst & Young and Deloitte & Touche in the UK.

The departure of Arthur Andersen leaves only four large international accounting firms in the world. This causes significant problems for large international corporations, because they are required to use separate accounting firms for their audit work and most non-audit services. Therefore, the loss of the fifth big accounting firm has considerably reduced the competition among the accounting firms and has increased accounting costs for many clients.

Mergers and Developments

Arthur Andersen
- Developed from Andersen, Delany
Ernst & Young
- Arthur Young
- Ernst & Whinney
  - Ernst & Ernst
PriceWaterhouse Coopers
- Coopers & Lybrand
- Price Waterhouse
Deloitte Touche Tohmatsu
- Deloitte & Touche
  - Deloitte Haskins & Sells
    - Deloitte
    - Haskins & Sells
  - Touche Ross
    - Touche, Ross, Bailey & Smart
      - Ross, Touche
      - George A. Touche
      - Touche, Niven, Bailey & Smart
        Touche Niven
        Bailey
        A. R. Smart
  - Tohmatsu & Co.
KPMG Peat Marwick
- Peat Marwick
  - William Barclay Peat
  - Marwick Mitchell'
- KMG
  - Klynveld Main Goerdeler
    - Klynveld Kraayenhof
    - McLintock Main Lafrentz
  - Deutsche Treuhand Gesellschaft

Other Countries

Israel

In Israel, there are five large auditors, four of whom are affiliates of the "Big Four Auditors":

Kost, Forer, Gabbay & Kasierer (Ernst & Young Israel)
KPMG Somekh Chaikin
Deloitte Brightman Almagor
Kesselman & Kesselman, PwC Israel
BDO Ziv Haft (affiliate of Binder, Dijker, Otte & Co)

Japan

In Japan, the "Big Four auditors" are local affiliates of the Big Four international firms:

Azusa (あずさ監査法人) - affiliate of KPMG
Chuo-Aoyama (中央青山監査法人) - affiliate of PwC
Shin-Nihon (新日本監査法人) - affiliate of Ernst & Young
Tohmatsu (監査法人トーマツ) - affiliate of Deloitte Touche

External links

http://www.big5friends.com/, an ad-supported website for current and former employees of Big 5 firms
http://www.big4.com/, an ad-supported website for former employees of Big 4 firms
http://raw.rutgers.edu/raw/internet/big5.htm, A table of links to Big 5 accounting firms, from a Rutgers University website

Public Accountant Firms | Auditing | Financial services companies of the United States | Big collectives | Big collectives

Big-Four-Prüfungsgesellschaften | Big Four | Большая четвёрка (аудит) | Didžioji ketveriukė (auditas)

Gourt Home::Gourt :: Big Four auditors