History of the Big 4 Auditing & consultancy firms
The Big 4 refers to the four biggest accounting firms globally, as measured by revenue. It used to be the Big 8 before a series of mergers and one spectacular collapse saw the number reduced by half.
The accountancy firms currently making up the Big 4 are
1 ....Deloitte
2.....EY (Ernst & Young)
3.....PwC (PricewaterhouseCoopers)
4.....KPMG (Klynveld Peat Marwick Goerdeler)
All four of them offer the usual auditing services provided by smaller accounting firms, although usually on a much larger scale. They also provide a wide range of tax, strategy and management consulting, as well as valuation, market research, assurance and legal advisory services. For most of the 20th century, eight accounting firms dominated the industry.
Those original Big 8 accounting firms were:
1.Arthur Andersen
2. Arthur Young
3. Coopers and Lybrand
4. Deloitte Haskins and Sells
5. Ernst & Whinney
6. Peat Marwick Mitchell
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7. Price Waterhouse
8. Touche Ross
The development towards today's Big 4 began in the late 1980s, when two mergers created a Big 6. Ernst & Whinney merged with Arthur Young to form Ernst & Young (later stylised as EY)while Deloitte, Haskins and Sells merged with Touche Ross to form Deloitte and Touche.
In the late 1990s, the Big 6 became the Big 5 when Price Waterhouse merged with Coopers and Lybrand to form PricewaterhouseCoopers (later stylised as PwC).
Five became four in 2001 after the insolvency of Arthur Andersen due to the firm's involvement in the Enron scandal. The firm was indicted and convicted for obstruction of justice for shredding documents related to the audit of Enron's finances, although the conviction was later overturned on a technicality. However, as the firm was not allowed to take on new clients while under investigation, its practices were sold off to the remaining members of what is now the Big 4. Later on Peat Marwick Mitchell evolved to KPMG.
Arthur Andersen was an American accounting firm based in Chicago that provided auditing, tax advising, consulting and other professional services to large corporations.
By 2001, it had become one of the world's largest multinational corporations and was one of the "Big Five" accounting firms (along with Deloitte, Ernst & Young, KPMG and PricewaterhouseCoopers). The firm collapsed by mid-2002, as details of its questionable accounting practices for energy company Enron and telecommunications company WorldCom were revealed amid the two high-profile bankruptcies.
The scandals were a factor in the enactment of the Sarbanes–Oxley Act of 2002.
Successor of Arthur Andersen are:
Accenture
Protiviti
Andersen Tax