Attestation Update – A&A for CPAs

Technical stuff for CPAs providing attestation services

Yet another look at the big in the Big 4 – 2016 edition

with 3 comments

Image courtesy of Adobe Stock.

Image courtesy of Adobe Stock.

I am constantly amazed at how massively big the Big 4 firms are in terms of revenue. Inside Public Accounting published their list of the 100 biggest accounting firms for 2016. This is quite current, since many firms have a May or June 2016 fiscal year-end.

Here’s the income number for the 10 largest firms, in millions of dollars, along with comparable data from a year ago:

  • 16 rept- 15 rept – firm
  • 16,147 – 14,908 – Deloitte
  • 12,899 – 11,724 – PwC
  • 11,190 –  9,900 – Ernst & Young
  •   7,889 –  6,870 – KPMG
  •   1,846 –   1,471 – RSM (McGladrey)
  •   1,556 –  1,383 – Grant Thornton
  •   1,290 –     833 – BDO
  •      745 –     687 – Crowe Horwath
  •      650 –     598 – CLA (CliftonLarsonAllen)
  •      610 –     600 – CBIZ

Indications of relative size

There is a noticable gap between 7th BDO and 8th Crowe Horwath. If the next three firms after KPMG merged, the they would be just over half the size of KPMG.

To surpass KPMG at #4 revenue, the next 9 largest firms would have to merge.

To surpass E&Y at #3 would require the next 18 firms after the Big 4 to merge.

If the 74 largest firms after KPMG merged, the new mega firm would barely be larger than Deloitte.

If the growth in each of the Big 4 were magically spun into separate companies, the new, imaginary firms would be the 8th, 9th, 10th, and 11th largest firms in the U.S. The Big 4 combined grew (4,713) more than the total revenue of the next three largest firms (4,691).

If the growth in the 4th largest firm could magically be spun off into a new firm, the new firm would be the 8th largest in the country.

Each of the Big 4 firms are massive. Combined they represent 74% of the $65,218M revenue of the top 100 list.

Written by Jim Ulvog

September 7, 2016, 7:49 am at 7:49 am

Posted in Audits

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3 Responses

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  1. This is how they justify their independence. So they lose one big client with a $10,000,000 fee. No big deal. They don’t discuss that the partner on the lost job has his income cut substantially.

    Bill Cleary

    September 7, 2016, 10:32 am at 10:32 am

    • Hi Bill:
      Agreed. I don’t have any idea how to maintain an independent attitude when you spend the entire year on one audit and there is another partner and several managers whose career is tied to you and this engagement.
      Thanks for taking the time to comment.
      This post has created a little bit of discussion on Twitter, look at feed for @UlvogCPA.
      Jim

      Jim Ulvog

      September 7, 2016, 10:51 am at 10:51 am

  2. Oh my, Going Concern is talking about this post: Reminder: The Big 4 are big, an Accident Waiting to Happen. No comments there yet; just waiting for the commentariat to jump in.

    Jim Ulvog

    September 7, 2016, 16:49 pm at 4:49 pm


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