![]() ![]() The firms were referred to as the Big Eight for most of the 20th century, reflecting the international dominance of the eight largest firms: Since the 1980s, numerous mergers and one major scandal involving Arthur Andersen, have reduced the number of major professional-services firms from eight to four. There are rare exceptions to this convention in 2007, KPMG announced a merger of four internationally distinct member firms (in the United Kingdom, Germany, Switzerland and Liechtenstein) to form a single firm, KPMG Europe LLP. These entities coordinate services performed by local firms within their respective areas, but do not perform services or hold ownership in the local entities. In many cases, each member firm practices in a single country, and is structured to comply with the regulatory environment in that country.Įrnst & Young also includes separate legal entities which manage three of its four geographic areas: the Americas, Asia-Pacific, and EMEIA (Europe, the Middle East, India and Africa) groups, the fourth area being Japan, which has no larger co-ordination branch. These accounting and professional services networks are similar in nature to how law firm networks in the legal profession work. Nevertheless, these networks colloquially are referred to as "firms" for the sake of simplicity and to reduce confusion with lay-people. Those entities do not themselves perform external professional services, nor do they own or control the member firms. For Deloitte, PwC and Ernst & Young, the co-ordinating entity is a UK limited company. However, KPMG International changed its legal structure from a verein to a co-operative under Swiss law in 2003, then to a UK limited company in 2020. Until 2020, KPMG was the only Big Four firm not registered as a UK private company, but rather the co-ordinating entity was a Swiss association (verein). Each network has established a global entity to co-ordinate the activities of the network. Each is a network of firms, owned and managed independently, which have entered into agreements with the other member firms in the network to share a common name, brand, intellectual property, and quality standards. None of the "firms" within the Big Four is actually a single firm rather, they are professional services networks. In July 2020, the UK Financial Reporting Council told the Big Four that they must submit plans by October 2020 to separate their audit and consultancy operations by 2024. In October 2018, the CMA announced it would launch a detailed study of the Big Four's dominance of the audit sector. Such a high level of industry concentration has caused concern, and a desire among some in the investment community for the UK's Competition & Markets Authority (CMA) to consider breaking up the Big Four. In the United Kingdom in 2011, it was reported that the Big Four account for the audits of 99% of the companies in the FTSE 100 Index, and 96% of the companies in the FTSE 250 Index, an index of the leading mid-cap listing companies. The Big Eight gradually reduced due to mergers between these firms, as well as the 2002 collapse of Arthur Andersen, leaving four networks dominating the market at the turn of the 21st century. ![]() ![]() The Big Eight consisted of Arthur Andersen, Arthur Young, Coopers & Lybrand, Deloitte Haskins and Sells, Ernst & Whinney, Peat Marwick Mitchell, Price Waterhouse, and Touche Ross. Until the late 20th century, the market for professional services was actually dominated by eight networks which were nicknamed the "Big Eight". A significant majority of the audits of public companies, as well as many audits of private companies, are conducted by these four networks. The Big Four all offer audit, assurance, taxation, management consulting, valuation, market research, actuarial, corporate finance, and legal services to their clients. The four are often grouped because they are comparable in size relative to the rest of the market, both in terms of revenue and workforce they are considered equal in their ability to provide a wide scope of professional services to their clients and, among those looking to start a career in professional services, particularly accounting, they are considered equally attractive networks to work in, because of the frequency with which these firms engage with Fortune 500 companies. They are the four largest global accounting networks as measured by revenue. The Big Four are the four largest professional services networks in the world: Deloitte, Ernst & Young (EY), KPMG, and PwC. ![]()
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