The Big 4 Accounting FirmsEverything You Need to Know 
Look, the Big 4 accounting firms are huge.
You already know that (the clue is in the name…). But what makes them so special? Why are there only four? Is it only about accounting (hint, it’s not!)?
Well stick around because that’s exactly what we’re going to find out in this article (and more).
The best part?
We’re going to dive into why you’d want to join one of the world’s biggest accounting firms (which is probably why you’re reading this, right?!). You can even use the information in this guide during your Big 4 networking conversations and interview!
Neat, eh? So let’s get started…
Who Are The Big 4 Accounting Firms?
The group is made up of PwC, Deloitte, EY and KPMG…and professional services is a broad term for almost any specialist service provided between two businesses.
Ok so there’s four of them. But why are they called “Big?”
Well, their sheer size, reputation and worldwide reach means that they dominate the field.
There are many other firms that provide similar services, but they are tiny in comparison.
Just look at the Big 4 revenue figures below!
The Big 4: A Brief History
The Big Eight Accounting Firms
- Arthur Andersen
- Coopers and Lybrand
- Ernst & Whinney
- Deloitte Haskins & Sells
- Peat Marwick Mitchell
- Price Waterhouse
- Touche Ross
- Arthur Young
Prior to the Big Eight–during the 19th century–there were thousands of small accounting firms scattered around the world. This model had historically worked very well.
But as many large UK and U.S. companies began doing business internationally, they needed to work with accounting firms with a similar global reach. As a result the Big Eight were formed.
It was a slow process getting to this point, where each of the slightly bigger firms partnered with or acquired many smaller local accounting firms, and this eventually lead to the Big Eight.
But then, as business intensified towards the end of the 20th century, the bigger firms started viewing each other with greedy eyes.
Peat Marwick Mitchell officially began the ascent into the Big 4 when it completed one of the biggest mergers to date, joining forces with a then top 20 firm Klynveld Main Goerdeler to form KPMG (the first of the current Big 4 accounting firms).* (*allegedly named because nobody could remember Klynveld Peat Marwick Mitchell Main Goerdeler…).
But that wasn’t the end of the story. Further expansion and competition led to the creation of…
The Big Six Accounting Firms
In the summer of 1989, the Big Eight became the Big Seven when Ernst & Whinney merged with Arthur Young to form Ernst & Young.
Later that same year, Deloitte, Haskins & Sells merged with Touche Ross to form Deloitte & Touche, and complete the Big Six.
The Big Five Accounting Firms
This time Price Waterhouse merged with Coopers & Lybrand to form PricewaterhouseCoopers, better know as PwC.
The Big Four Accounting Firms
Though Arthur Andersen was later acquitted of wrongdoing, the scandal ultimately led to the collapse of the firm.
Most of Arthur Andersen’s staff and clients joined the remaining members of the Big Four.
(Update: Arthur Andersen has been resurrected! Only time will tell if they can rejoin the upper echelon of professional service firms. )
Following a number of re-brands and smaller acquisitions, the Big 4 now officially consists of:
Before we dive into each of the Big 4 accounting firms in more detail, let’s take a look at what they do.
What exactly is professional services?
What Do The Big 4 Firms Actually Do?
It’s not only accounting!
While accountancy still forms a large part of what these firms do today, over the years they have expanded into hundreds of different businesses and industries.
It is no longer accurate to refer to them only as the Big 4 accounting firms.
While it’s true that the Big 4 do audit all but one of the Fortune 100 companies (well done to Grant Thornton for winning that one…!), audit fees equal only around one third of their total revenues.
So where does the other 66% of revenues come from?
To answer that, let’s take a quick look at the services offered by Deloitte. Their website lists the following broad categories
As you can see, accounting really does only form a small (but still significant) part of what they do. We’ve also gone even further looked at what Deloitte offers under “Global Business Tax Services.”
So the Big 4 are not really just the biggest accounting firms, they are professional service conglomerates.
Add this to the fact that Deloitte are also one of the biggest consulting firm in the world (far ahead of MBB), it gives you some indication of just how big these firms really are.
How The Big 4 Firms Are Organized
They are each a network of firms that agree to operate under the same name and general business terms.
EY France is actually a completely separate entity to EY Singapore, which is completely separate again to EY South Africa.
You might see each local firm being referred to as a member firm.
In some cases the bigger local firms, such as those in the U.S., will strategically purchase other smaller firms. However, it is actually within their interest to stay as separate firms to an extent.
The primary reason for the collapse of Arthur Andersen was due to the fact that, unlike the other Big Five, it was one global firm. When the Enron issue hit the U.S. part of the firm it effectively ended operations for the entire business.
Now we know what they are and how they operate, let’s take a closer look at each firm individually.
Work Culture At The Big 4 Firms
The Big 4 work hard. These are not 9-5 jobs. You will be expected to work long hours and may see some 70-80 hour weeks during busy season or at project close (that’s pretty rare though, you’ll have much more of a life than investment bankers…).
But then again these are the top accounting firms.
This can cause some people to burn out and resent their jobs (have you ever read the accounting subReddit?!).
But luckily for you, here at Big 4 Career LAB we teach you the right mindset for this type of work (because it’s certainly not for everyone…). The Big 4 firms all have a similar culture, primarily because they do the same work and employ the same types of candidates.
The most prominent differentiator in culture is not actually the firm but the specific office. It’s surprising to some, but the EY NYC office will be more like the Deloitte NYC office than the EY Seattle office.
Every office (or even each team with the office) has its own atmosphere determined by a few of the most senior partners.
To help us understand this, we asked some of our Big 4 Career LAB alumni to describe the culture in their office.
While we received some interesting replies, these were the most polarized opinions we received about the same Big 4 firm, but different office locations:
Why Would You Want to Work for the Big 4?
Working for any of the Big 4, regardless of which, is going to be a major positive for your career.
That’s a given. So long as you can get in…
The names of the Big 4 are known worldwide and valued extremely highly. There is a certain level of prestige that you cannot get anywhere else.
There’s a reason they are the best accounting firms to work for.
There are countless jobs openings out there right now, in public accounting and in industry, that say “Big 4 Experience Preferred” and some even REQUIRE it.
This is because employers know that all Big 4 employees have gone through a rigorous selection and training process.
If they hire from the Big 4 they know what they’re getting:
Top notch talent.
Another thing that is often overlooked is the quality of talent that works at the Big 4. It’s a known fact that working with young, like-minded, ambitious individuals will help push you to achieve your personal and career goals more effectively.
The Big 4 are great places to work that will reward your hard work. With that being said, we believe there are 3 general categories of employees in the Big 4 (and also public accounting).
- Those who absolutely love it and stick around forever
- Those who absolutely hate it and leave as soon as possible
- Those who understand what they want and either stay or leave for another opportunity, but do so with a clear mindset without complaining and a smart, thought out plan
Your Golden Ticket to Securing a Highly Respected and Prestigious Career at One of the Big 4 Firms
(Discover the secret hiring process used by the Big 4 Firms – narrated by a former Senior Manager at Deloitte)
In-depth Analysis of PwC
PwC is headquartered in London, U.K. and is chaired by Bob Moritz. This is our “PwC wiki.”
PwC Revenues, Clients and Global Reach
That gives you some indication of the hiring potential of the Big 4 accounting firms!
PwC’s revenues were $37.6 billion in 2017, an increase of 7% on the prior year. Most of this (76% to be exact) was earned in the U.S. and Western Europe.
This chart shows PwC’s split of revenues by service line over the past few years.
During 2017 PwC assisted 422 (84%) of the companies in the Fortune Global 500 list, and 410 (82%) of those in the U.S. Fortune 500 list.
PwC Work Culture
PwC are certainly the masters of the accounting world with the largest audit fees and biggest number of Fortune 100 audit clients. They focus a significant proportion of their business on this.
PwC is renowned for being the more fastidious, older and slow moving organization.
While they react relatively slower to changes in the business world than others within the Big 4 they have a very strong core of clients. This is a positive if you’re a detail oriented person who like the hierarchical nature of an organization.
In summary, PwC is the classic Big 4 accounting firm, with lots of accountants doing accounting for some of the world’s biggest companies. They have less of a focus on consulting and entrepreneurial businesses.
In-depth Analysis of Deloitte
Deloitte is nicknamed the green dot due to the period in its logo. Deloitte is headquartered in New York, U.S., and is chaired by David Cruikshank. This is our “Deloitte wiki.”
Deloitte Revenues, Clients and Global Reach
Deloitte is also the largest Big 4 accounting firm employer. It employs 244,400 people, with a huge 71,800 people hired in 2017.
Deloitte’s workforce increased 16% on the prior year, with an average of 53 applications received for every position (less than 2% hiring rate….crazy, right!).
Deloitte services more consumer and industrial products businesses than the rest of the Big 4.
Deloitte Work Culture
While the two firms continuously vie for the top spot in the Big 4, Deloitte is the opposite of PwC in terms of culture.
Deloitte’s audit practice is 40% smaller than PwC’s, which means that it has to concentrate on its other services. This is primarily consulting, which as noted above is its biggest service line.
Deloitte was the only Big 4 firm to retain its full consulting capability following the Enron crisis. This turned out to be a very good decision! It’s really the only one that can be called a true Big 4 consulting firm.
While audit is an annual process that requires long standing and deep client relationships that sometimes last for decades, consulting is more project based and oftentime new projects must be won and delivered each year.
This is reflected in Deloitte’s culture which is the most entrepreneurial and fast moving within the Big 4.
Deloitte also invests heavily in its people, including making huge investments in facilities like Deloitte University.
In-depth Analysis of EY
EY is headquartered in London, UK and is chaired by Mark Weinberger. This is our “EY/Ernst & Young Wiki.”
EY Revenues, Clients and Global Reach
In addition to audit, EY also has the second largest tax practice after PwC.
EY audits 23% of the Fortune 500 and provides some level of service to almost 80%. While still a network of individual firms, EY is the most globally managed of the Big 4. They retain a strict structure across the world with a Global board overseeing all policy and consistency of service.
EY Work Culture
Like PwC, EY has significant long term relationships with many large clients. They pride themselves on the length of their relationships, some lasting more than 70 years.
EY would be a good fit for anyone also considering joining PwC.
Another good point to remember about EY is that they structure their graduate hiring programs a bit differently too. New hires typically do rotational programs for 1-2 years in different specialisms.
In-depth Analysis of KPMG
KPMG is headquartered in Amstelveen, the Netherlands and chaired by John Veihmeyer. This our “KPMG Wiki.”
KPMG Revenues, Clients and Global Reach
While employees numbers are significantly less than the other Big 4 accounting firms, KPMG is second when it comes to revenue per employee (just behind PwC…Deloitte and EY are much further behind).
KPMG earned global annual revenues of $26.4 billion in 2017, which was an increase of 8% over the prior year.
KPMG also has the second largest advisory practice (at $10.18 billion in revenue) after PwC.
KPMG Work Culture
KPMG suits employees who value both their career and their personal life. Whereas some of the Big 4 have an “up or out” culture, KPMG attempts to retain employees (and has the lowest churn rate as proof).
KPMG is somewhere between the old-school accounting firm (PwC) and the more high tech, agile consulting firm (Deloitte). While audit still form a substantial part of what they do, their assurance practice is growing rapidly.
KPMG is also known for its sponsorship programs, sponsoring sports professionals like the golfer Phil Mickelson.
The Future of Big 4 Accounting Firms
There are two factors that could change all this though. They could completely reshape the audit and accounting landscape.
What are these factors?
Auditor independence and crypto-accounting.
Which makes sense if you think about it. If Deloitte both prepared and audited the financial statements of a company they would effectively be checking their own work. That’s a true conflict of interest.
Auditor independence is becoming stricter all the time, which is impeding the Big 4 from providing a variety of (often more valuable) services to their clients.
So, while auditing half of the Fortune 500 may seem great, it actually prevents you from providing many other services to those companies, some of which may be much more lucrative than auditing.
This is an issue for all of the Big 4, but particularly PwC and EY who are focused heavily on their audit practice.
Have you heard of cryptocurrencies, like Bitcoin? They work by providing a completely secure record of all transactions ever completed and so are in essence “unhackable.”
The success of cryptocurrencies has lead cryptographers to begin thinking about alternative uses for the blockchain technology.
So if you have a completely reliable and unhackable system for collecting and recording transactional data, where does that leave auditors, whose job it is to check this data?
Not in a good place. That’s where.
Here’s to hoping the big auditors, PwC and EY, have these factors on their radar.
But where does this leave Deloitte and KPMG?
Well, KPMG do have a fairly significant audit practice, but their tax and assurance businesses are also strong. They do not have the core audit relationships of PwC or EY and so would be in a slightly better position should the above factors hit hard.
Deloitte on the other hand wants these changes to come as quickly as possible. For starters Deloitte has the smallest audit practice of the Big 4 and so stands to lose the least.
But secondly and more importantly, they have a giant consulting business.
And guess which Big 4 service line is perfectly placed to help businesses implement crypto-accounting? Yep, consulting.
There’s some interesting changes coming soon. Even firms as large as the Big 4 aren’t immune to the changing economy.
How Can All This Information Get Me Into The Big 4?
But how does all this information help your career?
Well, first off you can use this knowledge in an interview. If a recruiter asks “what are the biggest market risks for PwC in the next 10 years,” you already have the perfect answer.
You also understand the significance of the Enron crisis to the history of these firms (which is a great way to impress a partner who will have lived through it).
Secondly, you know exactly how the Big 4 can help you achieve your own personal goals, whether it’s ultimately within or outside of the Big 4.
Whether you’re currently in accounting, finance, business or something else, joining the Big 4 is one of the best career moves you can make.
Are You Looking to Land a Prestigious Job at One of the Big 4 Firms?
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- The Proven step-by-step process which has already helped over 200 people secure jobs at the Big 4 (and how you can skip the traditional hiring process entirely…)
- Getting a job at a Big 4 Firm seems impossible? I’ll reveal the ONE SKILL that makes Big 4 HR managers go “Yes or No” during your interviews
- TWO Real Stories of my clients who landed highly-prestigious jobs at Big 4 Firms (despite getting rejected the first time around!)