As an aspiring accountant, you have probably heard a lot about the “Big Four” accounting firms. However, you may not know exactly which of firms make up the big four, or what makes them so important that they are consistently in the news. Think of the Big Four as the world’s largest professional networks providing services that range from tax preparation and auditing to corporate finance services and legal representation.
Today’s Big Four Firms
The Big Four accounting and auditing firms are: Deloitte, Ernst & Young, KPMG and PricewaterhouseCoopers.
Deloitte Touche Tohmatsu Ltd., the only member of the Big Four with its headquarters in the United States, brought in $34.2 billion in revenue in 2014, according to The Wall Street Journal. The firm was originally founded in London in 1845 by William Deloitte.
Ernst & Young made $27.4 billion in revenue in 2014, The Wall Street Journal reported. This firm originally opened in 1849 under the name Harding & Pullein. Not until 1989, several mergers later, did the firm take on the name Ernst & Young. Its headquarters are in London.
KPMG, based in the Netherlands, brought in revenues of $24.8 billion in 2014. The firm has operated under the name KPMG since 1987, but like the other Big Four, its origins date back to the 19th century.
PricewaterhouseCoopers, better known as PwC, made $34 billion in revenue in 2014. The London-based firm has existed under its modern name since 1998, but the brand Price Waterhouse dates back to 1849 and Coopers & Lybrand dates back to 1854.
How the Big Four Came to Be
The field of accounting is constantly changing, and perhaps nothing proves this point better than the development of the Big Four firms. You might be surprised to learn that the Big Four wasn’t always the sought-after designation. Until the Enron scandal in 2001 and the resulting allegations of inaccurate accounting forced the firm Arthur Andersen to close, it was the Big Five – and before that, the Big Six and the Big Eight. While a major scandal can remove a firm from the list, most of the changes reflect mergers among firms already on the list, not firms that are forced to shut their doors.
What It Means to Be in the Big Four
Each of the Big Four accounting and auditing firms currently employs between 160,000 and 200,000 people. These firms didn’t start out as massive organizations, but they grew steadily larger through several mergers that took place over more than a century. The Big Four firms are responsible for auditing most publicly traded and many private large companies. Though the competition for attaining a position at one of these firms is fierce, they do offer internships where accounting students can learn real-world skills from one of the biggest firms in the industry.
While the largest and most prestigious accounting and auditing firms have changed drastically over the years due to mergers, the responsibilities and prestige remain constant.