The Big Four Public Accounting Firms
The Big Four public accounting firms—Deloitte, PricewaterhouseCoopers, Ernst & Young, and KPMG—provide accounting and auditing services to the majority of the largest publicly traded companies in the world. Calling them "firms" isn't entirely accurate, because each of the Big Four companies comprise networks of firms that provide services—not as one single firm.
Services That the Big Four Provide
The total revenue of the Big Four, as a group, exceeded $134 billion in 2017, according to Statista. However, only a little more than a third of that revenue came from accounting and auditing services.
Consulting and advisory services are a large and growing part of the Big Four firms' service offerings. In 2017, these types of services accounted for a third of their total revenue—close to what their accounting and auditing services brought in.
Originally conceived as an adjunct to their core auditing and tax preparation services, Big Four consulting traditionally has focused on the design and implementation of accounting systems and processes, making them major players in the information technology field. Over time, their consulting services continue to extend into more strategic areas, such as merger and acquisition analysis, and general business strategy.
A little more than 20 percent of the Big Four's total revenue in 2017 came from tax services, and the rest came from other business services, such as market research and valuation.
Working for the Big Four
Even for people who don't intend to pursue a long career in public accounting or consulting, any period of work with the Big Four, including an internship, can be a valuable enhancement to a resume. The Big Four often recruit from prestigious colleges and universities for entry-level positions and are known for their training programs. These companies are major developers of talent within the financial services industry, and their training can even apply to future managers in other industries.
The Big Four accounting companies regularly appear on lists of the best employers to work for in general, as well as lists of the best companies for working moms. Often cited perks of working for these companies are flexible hours and telecommuting options. Combined, the Big Four had close to one million employees around the world in 2017, according to Statista.
Before the Big Four: The Big Eight
For many years since the early 1900s, there was a Big Eight before there was a Big Four:
- Arthur Andersen
- Coopers and Lybrand
- Ernst & Whinney
- Deloitte Haskins & Sells
- Peat Marwick International
- Price Waterhouse
- Touche Ross
- Arthur Young
These firms began to consolidate starting in the late 1980s through the early 2000s. First, Peat Marwick International merged with Klynveld Main Goerdeler in 1987 to form KPMG. In 1989, Deloitte Haskins & Sells merged with Touche Ross Tohmatsu, and Arthur Young merged with Ernst & Whinney. Next, Price Waterhouse merged with Coopers & Lybrand in 1998. Finally, Arthur Andersen fell from the Big Five after lawsuits and criminal charges related to the notable Enron and WorldComm scandals of 2002.
The Future of the Accounting Industry
The performance of the accounting industry is closely tied to the overall health of the economy—it often grows as the economy grows, and vice versa. The outlook for the accounting industry is positive, according to the U.S. Department of Labor's Bureau of Labor Statistics (BLS). The bureau projects that the employment rate for both accountants and auditors will grow 10 percent between 2016 and 2026, which is faster than the national average for all types of jobs.