The Big 4 Public Accounting Firms
These elite firms handle the accounting of the equally elite
The Big Four public accounting firms are the leading purveyors of accounting and auditing services worldwide. Their core clientele includes the largest publicly traded companies, and their primary activity is the certification of those companies' financial statements for accuracy, including conformity with Generally Accepted Accounting Principles (GAAP) in the U.S. and equivalent standards in other countries.
As with smaller public accounting firms, the Big Four also count nonprofit organizations and individuals among their clients, for whom the preparation of tax returns is a major activity. However, just as the Big Four tend to deal with only the largest for-profit companies, the nonprofits among their client lists normally also are quite large and wealthy. As for individual clients, they invariably are ultra high net worth people whose assets are so vast that they are practically of institutional size and sophistication.
Family office services are typically on offer to these ultra-wealthy individual clients.
The total revenue of the Big Four, as a group, exceeded $123 billion in 2015. Despite their size, they are organized as partnerships rather than as corporations.
Big Four business consulting services are a large and growing part of these firms' service offerings -- as much as 33 percent of total revenue. 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, Big Four consulting has become increasingly likely to extend into more strategic areas, such as merger and acquisition analysis, or general business strategy.
The consulting practices in Big Four firms normally are organized separately from their core auditing functions and have different management structures. Up or out policies, for example, are much more likely to be found in their consulting practices than an audit. Nonetheless, some engagements might require the assembly of cross-functional teams consisting of both audit and consulting personnel.
The Big Four include:
The Big Eight
Before there was a Big Four, for many years there was a Big Eight. These consolidations, from the 1990s through the early 2000s, reduced the Big Eight to the Big Four:
- Deloitte Haskins & Sells merged with Touche Ross Tohmatsu
- Arthur Young merged with Ernst & Whinney
- Price Waterhouse merged with Coopers & Lybrand
- Arthur Andersen was forced out of business by expensive lawsuits alleging audit malfeasance, notably in the Enron and WorldComm scandals of 2002.
- The eighth firm was Peat Marwick Mitchell, which merged with KMG in 1987 to form the Big Four firm KPMG
The Big Four often go by several similar, but slightly different names, depending on the preferences of the writer. These include, for example:
- Big Four Public Accounting Firms
- Big 4 Public Accounting Firms
- Big Four Accounting Firms
- Big 4 Accounting Firms
- Big Four Accounting and Auditing Firms
- Big 4 Accounting and Auditing Firms
- Big Four Auditing Firms
- Big 4 Auditing Firms
- Big Four Public Accounting and Auditing Firms
- Big 4 Public Accounting and Auditing Firms
Whatever variation you might see, the same four firms are being referenced.
Bottom Line for Financial Careers
Even if you do not intend to pursue a long career within public accounting or consulting, a period of service in the Big Four, including an internship, can be a valuable enhancement to your resume, whatever your future career path, given the prestige of these firms. The Big Four are major developers of talent within the financial services industry and important trainers of future managers in all industries, both in the financial sector and in general management.
Best Companies Lists
Also, note that the Big Four regularly appear on lists of the best companies to work for and the best companies for working moms. Regarding the working moms ranking, the Big Four are cited for offering flexible hours and telecommuting options.