Nov 2017

How much you know about Big Four (audit firms)

Download our Powerful Android App: Click Here to Download

Download the full article in PDF format : Click here

Similar articles

How to get selected 4 Articleship Training in Big4

Big 4′s – Do they create a better CA ? A big question

The Big Four are the four largest international professional services networks in accountancy and professional services, which handle the vast majority of audits for publicly traded companies as well as many private companies, creating an oligopoly in auditing large companies. The Big Four firms are shown below, with their latest publicly available data:

Firm Revenues Employees Fiscal Year Head Quarters
PWC (officially Price waterhouse Coopers $29.2b 169,000 2011 United Kingdom
KPMG $22.7bn 145,000 2012 Netherlands
Ernst & Young $22.9bn 152,000 2011 United Kingdom
Deloitte Touche Tohmatsu $28.8bn 182,000 2011 United States

Edwin Waterhouse (Founder of PWC)

Edwin Waterhouse

Know more about Edwin Waterhouse : Click here

sir william barclay peat (Founder of KPMG)

Know more about sir william barclay peat : Click here

Founder of Ernst & Young

Ernst & Young is the result of a series of mergers of ancestor organizations. The oldest originating partnership was founded in 1849 in England as Harding & Pullein.[6] In that year the firm was joined by Frederick Whinney. He was made a partner in 1859 and with his sons in the business it was renamed Whinney Smith & Whinney in 1894.

In 1903, the firm of Ernst & Ernst was established in Cleveland by Alwin C. Ernst and his brother Theodore and in 1906 Arthur Young & Co. was set up by the Scotsman Arthur Young in Chicago.

William Welch Deloitte (Founder of Deloitte)

William Welch Deloitte

Know more about William Welch Deloitte : Click here

Mergers and the Big Auditors (How Big 8 Converts Big 4)

Since 1989, mergers and one major scandal involving Arthur Andersen have reduced the number of major accountancy firms from eight to four.

Big 8

The firms were called the Big 8 for most of the 20th century, reflecting the international dominance of the eight largest accountancy firms:

  1. Arthur Andersen
  2. Arthur Young & Co.
  3. Coopers & Lybrand (until 1973 Cooper Brothers in the UK and Lybrand, Ross Bros., & Montgomery in the US)
  4. Ernst & Whinney (until 1979 Ernst & Ernst in the US and Whinney Murray in the UK)
  5. Deloitte Haskins & Sells (until 1978 Haskins & Sells in the US and Deloitte & Co. in the UK)
  6. Peat Marwick Mitchell (later Peat Marwick, then KPMG)
  7. Price Waterhouse
  8. Touche Ross

Most of the Big 8 originated in alliances formed between British and US accountancy firms in the 19th or early 20th centuries. Price Waterhouse was a UK firm which opened a US office in 1890 and subsequently established a separate US partnership. The UK and US Peat Marwick Mitchell firms adopted a common name in 1925. Other firms used separate names for domestic business, and did not adopt common names until much later: Touche Ross in 1960, Arthur Young (at first Arthur Young, McLelland Moores) in 1968, Coopers & Lybrand in 1973, Deloitte Haskins & Sells in 1978 and Ernst & Whinney in 1979.

The firms’ initial international expansion was driven by the needs of British and US based multinationals for worldwide service. They expanded by forming local partnerships or by forming alliances with local firms.

Arthur Andersen had a different history. The firm originated in the United States, and expanded internationally by establishing its own offices in other markets, including the United Kingdom.

In the 1980s the Big 8, each now with global branding, adopted modern marketing and grew rapidly. They merged with many smaller firms. One of the largest of these mergers was in 1987, when Peat Marwick merged with the KMG Group to become KPMG Peat Marwick, later known simply as KPMG.

Big 6

Competition among these public accountancy 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 organizations. On the other hand, in Australia the local firm of Touche Ross merged instead with KPMG.It is for these reasons that the Deloitte & Touche international organization was known as DRT International (later DTT International), to avoid use of names which would have been ambiguous (as well as contested) in certain markets.

Big 5

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

Big 4

The Enron collapse and ensuing investigation prompted scrutiny of their financial reporting, which was audited by Arthur Andersen, which eventually was indicted for obstruction of justice for shredding documents related to the audit in the 2001 Enron scandal. The resulting conviction, since overturned, still effectively meant the end for Arthur Andersen. Most of its country practices around the world have been sold to members of what is now the Big Four, notably Ernst & Young globally, Deloitte & Touche in the UK, Canada, Spain and Brazil, and PricewaterhouseCoopers(now known as PwC) in China and Hong Kong.

The Big 4 are sometimes referred to as the “Final Four”[citation needed] due to the widely held perception that competition regulators are unlikely to allow further concentration of the accounting industry and that other firms will never be able to compete with the Big 4 for top-end work, as there is a market perception that they are not credible as auditors or advisors to the largest corporations.

2002 saw the passage of the Sarbanes–Oxley Act into law, providing strict compliance rules to both businesses and their auditors.

In 2010 Deloitte with its 1.8% growth was able to beat PricewaterhouseCoopers with its 1.5% growth to gain first place and become the largest accounting firm in the industry. In 2011, PwC re-gained the first place with 10% revenue growth.

Mergers and developments

  • (2001) Arthur Andersen
    • Developed from Andersen, Delany
  • Ernst & Young(1989)
    • Arthur Young (1968)
    • Ernst & Whinney(1979)
      • Ernst & Ernst (US)
      • Whinney Murray (UK)
      • Whinney, Smith & Whinney
  • PwC(2010)
    • PricewaterhouseCoopers(1998)
      • Coopers & Lybrand(1973)
        • Cooper Brothers (UK)
        • Lybrand, Ross Bros, Montgomery (US)
      • Price Waterhouse
  • Deloitte Touche Tohmatsu
    • Deloitte & Touche(1989)
      • Deloitte Haskins & Sells(1978)
        • Deloitte & Co. (UK)
        • Haskins & Sells (US)
      • Touche Ross(1960)
        • Touche, Ross, Bailey & Smart
          • Ross, Touche (Canada)
          • George A. Touche (UK)
          • Touche, Niven, Bailey & Smart (US)
            • Touche Niven
            • Bailey
            • A. R. Smart
    • Tohmatsu & Co. (Japan)
  • KPMG(1987)
    • Peat Marwick Mitchell(1925)
      • William Barclay Peat (UK)
      • Marwick Mitchell (US)
    • KMG
      • Klynveld Main GoerdelerDeutsche Treuhand Gesellschaft (Germany)
        • Klynveld Kraayenhof (Netherlands)
        • Thomson McLintock (UK)
        • Main Lafrentz (US)
      • Deutsche Treuhand Gesellschaft (Germany)

Global member firms

Country Deloitte Touche Tohmatsu PwC Ernst & Young KPMG
Argentina Deloitte & Co. S.R.L Pricewaterhouse & Co. S.R.L. Ernst & Young Sibille
Bangladesh Hoda Vasi Chowdhury & Co. A. Qasem & Co. (AQC) S. F. Ahmed & Co. Rahman Rahman Huq
Brazil Deloitte PwC Ernst & Young Terco KPMG
China Deloitte Hua Yong PricewaterhouseCoopers Zhong Tian Ernst & Young Hua Ming KPMG Hua Zhen
Egypt Kamel Saleh Mansour & Co. Allied for Accounting and Auditing (Emad Ragheb) Hazem Hassan
El Salvador DTT El Salvador, S.A. de C.V. PricewaterhouseCoopers El Salvador Ernst & Young El Salvador, S.A. de C.V. Aguirre Garcia & Cia. S.A.
India Deloitte Haskins & Sells, A.F Ferguson, P C Hansotia, C C Chokshi & Co, S.B. Billimoria, M.Pal & Co., Fraser & Ross and Touche Ross & co Price Waterhouse, Price Waterhouse & Co., Lovelock & Lewes and Dalal & Shah S.R.Batliboi & Co., S.R.Batliboi & Associates, S.V.Ghatalia & Associates BSR & Co
Indonesia KAP Osman Bing Satrio KAP Tanudiredja, Wibisana & Rekan KAP Purwantono, Suherman & Surja KAP Sidharta dan Widjaja
Israel Deloitte Brightman Almagor Zohar Kesselman & Kesselman, PwC Israel Kost, Forer, Gabbay & Kasierer (Ernst & Young Israel) KPMG Somekh Chaikin
Japan Deloitte Touche Tohmatsu
Kansa Houjin Tohmatsu
PricewaterhouseCoopers Aarata
Aarata Kansa Houjin
Ernst & Young ShinNihon LLC
ShinNihon Yugen-sekinin Kansa Houjin
KPMG AZSA LLC (formerly KPMG AZSA & Co.)
Azsa Kansa Houjin
Jordan Deloitte Touche(M.E) PwC Ernst & Young KPMG
Lebanon Deloitte Touche(M.E) PwC Ernst & Young
Malaysia Deloitte KassimChan PricewaterhouseCoopers Ernst & Young KPMG
Mexico Galaz, Yamazaki, Ruiz Urquiza, S.C. PricewaterhouseCoopers México Mancera S.C. KPMG Cárdenas Dosal, S.C.
Morocco Deloitte Touche(M.E) PwC Ernst & Young KPMG
Nigeria Akintola Williams Deloitte PwC Nigeria Ernst & Young KPMG
Pakistan M. Yousuf Adil Saleem & Co. A. F. Ferguson & Co. Ernst & Young Ford Rhodes Sidat Hyder KPMG Taseer Hadi & Co.
Philippines Manabat Delgado Amper & Co. Isla Lipana & Co. Sycip Gorres Velayo & Co. Manabat Sanagustin & Co.
Saudi Arabia Deloitte & Touche Bakr Abulkhair & Co PricewaterhouseCoopers LLP Ernst & Young Saudi Arabia KPMG Al Fozan & Al Sadhan
South Africa Deloitte Touche Tohmatsu PWC Ernst & Young KPMG
South Korea Anjin LLC Samil LLC Hanyoung LLC Samjong LLC
Sri Lanka PwC Ernst & Young KPMG
Sweden Deloitte Touche Tohmatsu Öhrlings PricewaterhouseCoopers KPMG
Syria Deloitte(M.E)- Nassir Tamimi Chartered Accountant Pricewaterhousecoopers Abdul Kader Hussarieh and partners Mejanni & Co. Charted Accountants and Consultants LLC
Taiwan Deloitte. PricewaterhouseCoopers Taiwan Ernst & Young KPMG
Turkey DRT Bagimsiz Denetim ve S.M.M. A.S. Basaran Nas Bagimsiz Denetim ve SMMM A.S. Güney Bagimsiz Denetim ve S.M.M. A.S. Akis Bagimsiz Denetim ve S.M.M. A.S.
Uzbekistan. Deloitte Touche Tohmatsu ASC PricewaterhouseCoopers Evan Young



1 Comment on How much you know about Big Four (audit firms)

  1. How to get placed here??? I am appeating for first group only this Nov’s IPCC exam. Wanted to ask what are my chances of getting placed in any of the above firm! I have heard that they just consider both group passed students

Comments are closed.

%d bloggers like this: