The Big Four Accountancy Firms
Of all the accountancy firms that exist, there are four clear leaders in the industry. This group of companies works in international accountancy and handles audits for many of the largest companies in the world both publicly traded and privately. The companies that are a part of the Big Four accountancy firms are PricewaterhouseCoopers accountants, Deloitte Touche Tohmatsu accountants, Ernst and Young accountants, and KPMG accountants.
Before the Big Four became known as the Big Four, they included a fifth member and were called the Big Five. The fifth member of the Big Five, Arthur Andersen was founded in 1913. In the aftermath of the infamous Enron scandal of 2001, Arthur Andersen received a conviction that ended its ability to audit public companies. Four years later in 2005, the United States Supreme Court overturned the conviction allowing Arthur Andersen to audit public companies once again. By this time, however, Arthur Andersen no longer existed. The company's international practice was sold to the companies now known as the Big Four.
The largest of the Big Four accountancy firms is PricewaterhouseCoopers, also known as PwC. The firm is the result of a merger between two large firms, Price Waterhouse and Coopers and Lybrand. Each of these companies has existed since the 1800s. In 1989, Price Waterhouse and Arthur Andersen entertained the idea of a merger but conflicts of interest caused the negotiations to fail. PwC offers services in audit and assurance, tax including planning and compliance, and advisory and consulting.
The next largest of the accountancy firms is Deloitte Touche Tohmatsu. Not only does Deloitte Touche Tohmatsu provide accounting services, it also provides business advisory services to other Fortune 500 companies. Similar to PricewaterhouseCoopers, Deloitte Touche Tohmatsu is also the result of a merger. Two companies, Touche Ross and Deloitte Haskins and Sells merged in 1990. The Tohmatsu part of the name comes from a company, Tohmatsu and Co., which merged with Touche Ross in 1975.
Ernst and Young, third member of the Big Four accountancy firms, is also a result of several mergers the first occurring in 1965 with Whinney, Smith and Whinney and Brown, Fleming and Murray. Ernst and Young provides services in three major categories. These are assurance and advisory business services, tax services, and transaction advisory services.
The fourth member of the Big Four is KPMG. Each of the letters in the name comes from either an originating firm or a past chairman of the company. K comes from Klynveld Kraayenhof and Co, P from William Barclay Peat and Co, M from James Marwick, and G from Reinhard Geordeler.