Big Four (accounting firms)
Big Four refers to the oligopoly of the four largest accounting firms in the world: Deloitte , EY (Ernst & Young) , KPMG and PricewaterhouseCoopers (PwC) . It represents around 67 percent of global auditing sales.
The Big Four examine a large part of the listed companies worldwide, including almost all companies in the major stock indices S&P 500 (USA), DAX (Germany) and FTSE 100 (Great Britain). In Germany , 142 of the 160 listed companies that make up the four most important German stock indices DAX, MDAX , SDAX and TecDAX, are audited by the Big Four.
The Big Four are also active in tax advice and general management advice and advise their clients, e.g. B. in questions relating to the digitization of business models.
Together, the Big Four employ almost 1,000,000 people worldwide with a turnover of around 145 billion euros.
composition
The Big Four accounting firms are:
| Surname | Employees worldwide |
Employee Germany |
Employee Switzerland |
Employee Austria |
Sales worldwide | history |
|---|---|---|---|---|---|---|
| Deloitte | 312,000 (2019) | 6,566 (2017) | > 2,000 (2019) | 1,400 (2019) | $ 46.2 billion | formerly Deloitte & Touche, created through the merger of Touche Ross and Deloitte Haskins & Sells |
| EY (Ernst & Young) | 261,559 (2018) | 9,937 (2017) | 2,538 (2019) | 1,049 (2019) | $ 34.8 billion | created through the merger of Ernst & Whinney and Arthur Young |
| PricewaterhouseCoopers (PwC) | 250,930 (2017) | 10,627 (2017) | 3,256 (2019) | 1,241 (2019) | $ 41.3 billion | created through the merger of Price Waterhouse and Coopers & Lybrand |
| KPMG | 200,000 (2017) | 10,451 (2017) | 2,092 (2019) | 1,630 (2019) | $ 26.4 billion | created by the merger of Peat Marwick International and the KMG group |
History of the term
In the 1980s the term Big Eight emerged ; he named the eight largest - and internationally dominant - accounting firms at the time. The Big Eight came about through mergers of regional accounting firms in the 1970s and previous decades.
These Big Eight were:
- Arthur Andersen
- Arthur Young
- Coopers & Lybrand
- Ernst & Whinney
- Deloitte, Haskins & Sells
- Peat Marwick International (PMI)
- Price Waterhouse
- Touche Ross
The auditing firms PMI and KMG (Klynveld Main Goerdeler), which merged the year before, have been known as KPMG since 1987 .
The Big Eight became the Big Six in 1989 when Ernst & Whinney merged with Arthur Young to form Ernst & Young in June and Deloitte, Haskins & Sells merged with Touche Ross to form Deloitte & Touche in August .
The Big Six became the Big Five in July 1998 when Price Waterhouse merged with Coopers & Lybrand to form PricewaterhouseCoopers .
As a result of the Enron scandal in 2001, Arthur Andersen's independent national companies merged with various companies, particularly the other large audit firms. In Germany, most of the company went to Ernst & Young, including in Great Britain and Spain. Arthur Andersen went under as an independent company or brand and the Big Five became the Big Four .
Development in Germany
In Germany there was an almost parallel development, but with some special features:
- The turnover of the Big Four in Germany amounts to a total of 6.89 billion euros (2017). This corresponds to a growth of 13.9% compared to 2016 (6.05 billion euros).
- In terms of turnover, PwC is the market leader among the Big Four in Germany (EUR 2.07 billion), followed by EY (Ernst & Young) (EUR 1.83 billion), KPMG (EUR 1.66 billion) and Deloitte (1 , 34 billion euros).
- Due to the large gap between Deloitte and PwC, KPMG and Ernst & Young, there is basically a big three on the German market, unlike a global view in which Deloitte and PwC lead the market with a noticeable gap to the other Big Four - Situation. However, Deloitte has significantly reduced this large gap in recent years through considerable growth.
- Deloitte grew the most in the period 2014-2016 (Ø 13.2% per year), KPMG the weakest (Ø 6.4% per year).
- Ernst & Young grew the most in the period 2010 - 2016 (Ø 5.5% per year), KPMG the weakest (Ø 3.7% per year).
- The Big Four are growing primarily in the consulting area (tax advice, management advice) and are thus developing into broad-based service and consulting firms; in the classic business of auditing balance sheets, only slight growth has been generated for years.
- The Big Four share 83 percent of the business as auditors with the 160 large German stock corporations (as of 2011).
- When it comes to the large DAX companies, there is a big two situation in Germany : KPMG (currently examining 16 DAX companies) and PwC (10) dominate the 30 large German companies listed in the DAX. As of 2017, Deloitte will only examine one single DAX mandate with Bayer AG . Ernst & Young is reviewing Siemens , Beiersdorf , HeidelbergCement and, from 2018, Commerzbank .
- As a result of the EU auditor reform , many large companies have been re -tendering their audit assignments for several years, which has led to a reallocation of mandates.
- In the insurance industry, which was previously dominated by KPMG, PwC was able to position itself as the new number one in the wake of the EU auditor reform (including Allianz SE , Hannover Re ).
- At the big banks, KPMG was number one in Germany for a long time with many large audit assignments (including Deutsche Bank , KfW , Landesbank Baden-Württemberg , Norddeutsche Landesbank ). Traditionally, PwC only audited Commerzbank and Landesbank Hessen-Thüringen , Bayerische Landesbank was audited by Deloitte and DZ Bank by Ernst & Young. In the course of the EU auditor reform, however, the market shares in this area have shifted significantly to the disadvantage of KPMG. Ernst & Young in particular was able to grow strongly here and from 2018 has held more auditing mandates among the major German banks than any other auditing company (including Commerzbank, KfW, DZ Bank, Landesbank Hessen-Thüringen, NRW.Bank ).
- According to the 2015 Lünendonk list, the Big Four are by a considerable distance behind BDO AG , Rödl & Partner , Ebner Stolz and Baker Tilly Roelfs . However, these companies achieve less than a third or a quarter of Deloitte's sales and grow much more slowly than the Big Four .
- In the third division, so to speak, three companies operate, which in turn have less than half of the turnover of the second division companies: Mazars , Warth & Klein Grant Thornton and PKF Fasselt Schlage.
In addition, large networks as mergers of medium-sized accounting companies play a role in the auditing market in Germany , such as B. Nexia International, Crowe Global , Moore Stephens Germany, Grant Thornton International, RSM Germany , PKF International (Pannell Kerr Forster), HLB Germany, Baker Tilly International , AGN International, Kreston International, DFK International , Moores Rowland, Ecovis , Accountants Global Network or SC International.
| year | PwC | EY | KPMG | Deloitte | ||||
|---|---|---|---|---|---|---|---|---|
| Sales (in billions of euros) | development | Sales (in billions of euros) | development | Sales (in billions of euros) | development | Sales (in billions of euros) | development | |
| 2009 | 1.37 | 1.09 | 1.25 | 0.72 | ||||
| 2010 | 1.33 | −2.9% | 1.06 | −2.8% | 1.19 | −4.8% | 0.58 | −19.4% |
| 2011 | 1.45 | 9.0% | 1.09 | 2.8% | 1.20 | 0.8% | 0.62 | 6.9% |
| 2012 | 1.49 | 2.8% | 1.16 | 6.4% | 1.30 | 8.3% | 0.65 | 4.8% |
| 2013 | 1.55 | 4.0% | 1.27 | 9.5% | 1.33 | 2.3% | 0.67 | 3.1% |
| 2014 | 1.55 | 0.0% | 1.37 | 7.9% | 1.38 | 3.8% | 0.73 | 9.0% |
| 2015 | 1.65 | 6.5% | 1.53 | 11.7% | 1.51 | 9.4% | 0.79 | 8.2% |
| 2016 | 1.91 | 15.8% | 1.57 | 2.6% | 1.60 | 6.0% | 0.96 | 21.5% |
Market Distribution (Dax)
Division of the market among the Big Four according to the annual reports of the respective DAX companies for the respective financial year
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criticism
Prem Sikka ( Professor of Accounting , University of Essex ) sharply criticized the Big Four's tax advisory activities in connection with the Luxembourg Leaks . Their tax agreements, which make it possible to reduce tax payments by a considerable amount, have the consequence "that normal people have to pay higher taxes because their tax avoidance schemes relieve large corporations and rich people". He calls for the power of the large audit firms to be limited, otherwise they would continue to use their power "to undermine democracy, justice and the well-being of the people."
Web links
- Tax avoidance: the role of large accountancy firms House of Commons Committee of Public Accounts, April 26, 2013
- International Consortium of Investigative Journalists : Big 4 Audit Firms Play Big Role in Offshore Murk , November 5, 2014 (detailed text in English on the Big 4)
- Tax-free - How corporations plunder Europe's coffers Phoenix, August 31, 2016
- The uncanny power of advisors. How politics can be steered Phoenix, 2019
- Hannes Munzinger, Frederik Obermaier, Bastian Obermayer, Rainer Stadler, Georg Wellmann (collaboration: Okan Bellikli, Petra Blum, Michael Wech): Four wins. Whether in Germany or around the world: Corporations and governments are dependent on four major auditors - and every attempt to limit the power of the Big Four fails. The close-up of a grievance. Süddeutsche Zeitung (BUCH ZWEI), 23./24. February 2019 ( report for a fee )
Individual evidence
- ^ A b The Big Four - Custodians of capitalism . In: The Economist . tape 425 , no. 9071 . New York December 16, 2017, p. 56 .
- ↑ Sam Fleming: Accountants PwC, Deloitte, KPMG and EY face taming moves. In: Financial Times . February 12, 2014, accessed November 17, 2017 (English, Paywall ).
- ↑ When the auditor is also an advisor. In: WDR . August 13, 2015, archived from the original on August 13, 2016 ; accessed on November 17, 2017 .
- ↑ Brigitte Scholtes : Auditing companies - The power of insiders. In: Deutschlandfunk . May 11, 2015, accessed May 30, 2017 .
- ↑ Leading auditing and tax consultancy companies in Germany. (PDF (501 KB)) Lünendonk & Hossenfelder , July 21, 2017, accessed on November 17, 2017 .
- ↑ 2019 Global Impact Report. Deloitte , accessed September 16, 2019 .
- ↑ About Deloitte | Deloitte Switzerland | Auditing, tax advice, consulting, financial advisory. Retrieved July 3, 2020 .
- ↑ Deloitte Austria Transparency Report 2019. Accessed February 1, 2020 .
- ↑ 2019 Global Impact Report. Deloitte , accessed September 16, 2019 .
- ↑ Facts and Figures - Global review - EY Global. Ernst & Young , accessed September 19, 2018 .
- ↑ EY Annual Report Switzerland 2019. Retrieved on July 3, 2020 .
- ↑ Annual Report 2019 Austria - Talents. Accessed February 1, 2020 .
- ↑ Facts and Figures - EY Global review. Retrieved on September 7, 2019 (en-GL).
- ↑ Numbers and facts. PricewaterhouseCoopers , accessed November 17, 2017 .
- ↑ PricewaterhouseCoopers: Facts and Figures. Retrieved on July 3, 2020 (Swiss Standard German).
- ↑ Transparency report PwC Austria 2019. Accessed on February 1, 2020 .
- ↑ PricewaterhouseCoopers: Global Annual Review 2018. Accessed September 7, 2019 (en-gx).
- ↑ KPMG compact. KPMG , accessed November 17, 2017 .
- ↑ Who we are - KPMG Switzerland. April 17, 2020, accessed on July 3, 2020 (Swiss Standard German).
- ↑ Transparency report KPMG Austria 2019. Accessed on February 1, 2020 .
- ↑ 2017 International Annual Review - KPMG Global. June 19, 2019, Retrieved September 7, 2019 (American English).
- ↑ Suzanne Kapner: British Unit Of Andersen Is Defecting To Deloitte. In: nytimes.com. The New York Times, April 11, 2002, accessed May 30, 2017 .
- ↑ Susanne Schier: Pressure to merge with auditors is increasing. In: Handelsblatt . September 10, 2010, accessed November 17, 2017 .
- ↑ Big 4 Accounting Firms. In: Accountingverse.com. Retrieved November 17, 2017 .
- ↑ Dieter Fockenbrock: The uncanny power of the great auditors. In: Handelsblatt . January 19, 2011, accessed November 17, 2017 .
- ↑ Leading auditing and tax consultancy companies in Germany. (PDF (205 KB)) Lünendonk & Hossenfelder , 2015, accessed on November 17, 2017 .
- ↑ Luxemburg Leaks - Why a Professor thinks PwC is a threat to society. In: Süddeutsche Zeitung . January 31, 2015, accessed January 30, 2016 .