Big Four auditors
The
Big 4, sometimes written as the
Big Four, is a group of international
accountancy and
professional services firms that handles the vast majority of
audits for
publicly traded companies as well as many
private companies.
The members of the Big 4 are
PricewaterhouseCoopers,
Deloitte Touche Tohmatsu,
Ernst & Young and
KPMG.
This group of large public accountancy firms, once known as the "Big 5", also included
Arthur Andersen. Arthur Andersen 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. However, Arthur Andersen ceased to exist as an entity and sold all of international practice to other Big 5 firms.
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 RossThe 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'
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'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
* 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
