The Big Four are the four largest professional services networks in the world: Deloitte, EY, KPMG, and PwC.
[1] The four are often grouped because they are comparable in size relative to the rest of the market, both in terms of revenue and workforce; they are considered equal in their ability to provide a wide scope of professional services to their clients; and, among those looking to start a career in professional services, particularly accounting, they are considered equally attractive networks to work in, because of the frequency with which these firms engage with Fortune 500 companies.
The Big Four all offer audit, assurance, taxation, management consulting, valuation, market research, actuarial, corporate finance, and legal services to their clients.
The Big Eight gradually reduced due to mergers between these firms, as well as the 2002 collapse of Arthur Andersen, leaving four networks dominating the market at the turn of the 21st century.
[2] Such a high level of industry concentration has caused concern, and a desire among some in the investment community for the UK's Competition & Markets Authority (CMA) to consider breaking up the Big Four.
In October 2018, the CMA announced it would launch a detailed study of the Big Four's dominance of the audit sector.
In July 2020, the UK Financial Reporting Council told the Big Four that they must submit plans by October 2020 to separate their audit and consultancy operations by 2024.
[5] For over 70 years, the SEC has continually sought for greater coordination and consistent quality in audits everywhere in the world.
In the US, the Public Company Accounting Oversight Board's (PCAOB) regulations provide for inspection of non-United States firms.
Ultimately, size is the only real means of differentiation that is readily available on accounting firms to assure clients that they can do international work.
[7] From the perspective of the accounting firm, a global regulated organization with consistently applied standards significantly reduced the risk.
However, increasing the size of the networks can enhance legal liability risks and quality control issues that have not been resolved.
Having reached their natural limit on growth with more than 90% of auditing for public companies, the Big 6 branched out to become multidisciplinary in legal, technology, and employment services.
When the Big 6 began its expansion to the legal profession, it was met with fierce opposition from law firms and bar associations.
As a result of court cases this has introduced significant vicarious liability issues requiring the networks to distance themselves from the perception of being a single entity.
While the firms have lost a number of cases, the facts and circumstance, or procedural elements have reduced their actual liability.