Accounting networks and associations

Accounting networks and associations are professional services networks whose principal purpose is to provide members resources to assist the clients around the world and hence reduce the uncertainty by bringing together a greater number of resources to work on a problem. The networks and associations operate independently of the independent members. The largest accounting networks are known as the Big Four.

The Big Four

The Big Four are the four largest international professional services networks, offering audit, assurance, tax, consulting, advisory, actuarial, corporate finance, and legal services. They handle the vast majority of audits for publicly traded companies as well as many private companies, creating an oligopoly in auditing large companies. It is reported that the Big Four audit 99% of the companies in the FTSE 100, and 96% of the companies in the FTSE 250 Index, an index of the leading mid-cap listing companies.[1] The Big Four firms are shown below, with their latest publicly available data. None of the Big Four firms is a single firm; rather, they are professional services networks. Each is a network of firms, owned and managed independently, which have entered into agreements with other member firms in the network to share a common name, brand and quality standards. Each network has established an entity to co-ordinate the activities of the network. In one case (KPMG), the co-ordinating entity is Swiss, and in three cases (Deloitte Touche Tohmatsu, PricewaterhouseCoopers and Ernst & Young) the co-ordinating entity is a UK limited company. Those entities do not themselves perform external professional services, and do not own or control the member firms. They are similar to law firm networks found in the legal profession. In many cases each member firm practises in a single country, and is structured to comply with the regulatory environment in that country. In 2007 KPMG announced a merger of four member firms (in the United Kingdom, Germany, Switzerland and Liechtenstein) to form a single firm. Ernst & Young also includes separate legal entities which manage three of its four areas: Americas, EMEIA (Europe, The Middle East, India and Africa), and Asia-Pacific. (Note: the Japan area does not have a separate area management entity). These firms coordinate services performed by local firms within their respective areas but do not perform services or hold ownership in the local entities.[2] This group was once known as the "Big Eight", and was reduced to the "Big Six" and then "Big Five" by a series of mergers. The Big Five became the Big Four after the demise of Arthur Andersen in 2002, following its involvement in the Enron scandal.

Firm Revenues Employees Revenue per Employee Fiscal Year Headquarters Source
Deloitte $36.8bn 244,400 $150,573 2016 United States [3]
PricewaterhouseCoopers $35.9bn 223,468 $160,649 2016 United Kingdom [4]
Ernst & Young $29.6bn 230,800 $128,362 2016 United Kingdom [5]
KPMG $25.4bn 188,982 $134,510 2016 Netherlands [6]

History of accounting networks and associations


Accounting networks were created to meet a specific need. “The accounting profession in the U.S. was built upon a state-established monopoly for audits of financial statements.”[7] Accounting networks arose out of the necessity for public American companies to have audited financial statements for the Securities Exchange Commission (SEC).[8] For over 70 years, the SEC has continually sought for greater coordination and consistent quality in audits everywhere in the world. Networks were the logical model to address these requirements. They expanded outside of the United States since financial results had to be audited wherever a company conducted business. In the US, the Public Company Accounting Oversight Board's (PCAOB) regulations provide for inspection of non-United States firms. Without a network with common standards and internal means of communications, conducting the required audits would not be possible.

There were other profession-based factors which favored the growth of accounting networks. As a result of competition for the audit work, consolidation was inevitable. These include the fact that a network can establish a brand. A brand establishes the credibility of the network and allows the individual members to charge more. Creating a brand is very difficult when all of the members of a network are providing essentially the same services.

Being a network member establishes that the firm is part of a large group. Additionally, the larger the firm, the more likely it will be invited to render auditing engagements. A large organized network allows for spreading the costs to price competitively. 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.[9]

Networks also reflect the clients’ needs for seamless worldwide services because they are more efficient and cost-effective.,[10] 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.

With these factors in play, some networks continued to grow; others remained in a stasis position. Individual members of networks began to offer other services related to accounting. These services included forensic accounting, business appraisals, employee benefits planning, strategic planning, and almost anything associated with financial parts of the client’s business. The network’s structure easily accommodated these services and their geographical expansion.[11]

As the Big 8 consolidated to become Big 6, the Big 5 and then the Big 4, new networks naturally developed to emulate them. BDO and Grant Thornton were the earliest followers. Networks were then developed to serve mid-market companies and private businesses. New networks also sprang up as an extension of a single accounting firm in the same way the Big 8 were formed. New structures were created to further extend the networks.

The largest accounting networks adopted trade names that each member used. The names of the original firms that became part of the networks were lost and replaced with trade names. For example, PriceWaterhouseCoopers became PWC. The perception was created that these networks were more than networks, but single entities rather than completely independent firms. This was never the case. The result was that the Big 8 concept was established which separated the eight firms from all other accounting firms.

Another factor in the development of networks in accounting was the American Institute of Certified Public Accountants(AICPA)’s prohibition of advertising. While the largest firms indirectly advertised their services, the small firms complied with the rules and believed advertising to be unprofessional. Additionally, midsize firms were de facto restricted from advertising simply because of limited budgets. They could not create a brand that was able to compete with the one established by the Big 8. The advertising restriction was lifted in the 1970s by the Federal Trade Commission.[12]

Multidisciplinary expansion

In the 1990s, the large accounting firms reached another ceiling in the services they made available to their clients. 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. Since the essential infrastructure was in place, it was thought to be relatively simple to incorporate other services into the existing network. As a network, it was natural to create independent entities in these other professions which themselves could be part of the network. The method and structures varied from firm to firm.

When the Big 6 began its expansion to the legal profession, it was met with fierce opposition from law firms and bar associations. Commissions, panels and committees were established by legal and accounting firms to argue their positions. Government agencies were enlisted. For more than five years the debate escalated. This movement ended abruptly with the fall of Arthur Andersen as a result of its association with Enron. Sarbanes Oxley followed, which effectively ended this trend. Some international associations of independent firms, such as Alliott Group, now include law firms within the membership.

Recent Global Ranking

Here are the top 10 global accounting firms in 2017, according to research conducted by CA magazine.[13]

Global Accountancy Top 10
No. Firms REVENUE ($BN)
1 Deloitte 38.8
2 PwC 37.7
3 EY 31.4
4 KPMG 25.4
5 BDO 7.6
6 Grant Thornton 4.8
7 RSM 4.64
8 Crowe Horwath International 3.7
9 Baker Tilly International 3.23
10 Nexia 3.2

Vicarious liability

Accounting networks are now facing a new challenge that go to the heart of the image that the firms wish to project to clients. The perception has been that the Big 4, Grant Thornton and BDO are single entities that perform services around the world for clients of this single entity. 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. The Parmalat case is the best illustration of the issues.

While the firms have lost a number of cases, the facts and circumstance, or procedural elements have reduced their actual liability.

Networks versus associations

The vicarious liability issues carry over into operations. Regulations in the EU have been imposed that require the “networks” to define whether they are "associations" of independent firm or are more integrated networks operationally and financially.[14] Additional standards have been passed by IFAC, an independent associations of accountants, on distinguishing networks from associations. The objectives of each are to provide the clients a level of understanding about the degree of integration with each other. Examples of international associations of accounting firms include Alliott Group, Geneva Group International and Leading Edge Alliance.

Conflicts of interest

Self-definition as a network or associations may determine if there is a conflict of interest.[15] If the group is perceived as a network, it may be foreclosed from representation of clients because they cannot represent a competitor. Association members would not be foreclosed from representation because the firms are perceived as independent by clients.

Big 4 dominance of public company audits

Accounting scandals have again focused on the fact that the Big 4 has a near monopoly on audits of public companies.[16] Networks are demanding regulations on auditing to require that auditors rotate and include the smaller networks in this rotation.[17] The demands also request that mid-market firms be able to participate to break up the monopoly of the Big 4.

List of Accounting Networks and Associations

INAA Group

  • JHI International
  • Netherlands KPMG (Klynveld Main Goerdeler, Peat Marwick)
  • United Kingdom Kreston
  • United Kingdom Kudos
  • United Kingdom MGI Worldwide
  • United Kingdom Moore Stephens
  • United Kingdom UHY International
  • United Kingdom Nexia
  • AustraliaCanadaUnited KingdomUnited States PKF International
  • United Kingdom PwC (PricewaterhouseCoopers) (Coopers Lybrand/Cooper Brothers, Lybrand Ross Brothers Montgomery, Price Waterhouse)
  • ChinaHong Kong Reanda International
  • United KingdomUnited States RSM International
  • United Kingdom Russell Bedford International
  • United States Santa Fe Associates International
  • Argentina SMS Latinoamérica

See also


  1. ^ Mario Christodoulou (2011-03-30). "U.K. Auditors Criticized on Bank Crisis". Wall Street Journal.
  2. ^ "Legal statement". Ernst & Young.
  3. ^ "Deloitte". Retrieved 2 August 2017.
  4. ^ "PwC Global Annual Review 2016" (PDF). PwC.
  5. ^ "EY Global Review 2016 - Facts & Figures". Ernst & Young.
  6. ^ "International Annual Review 2016 KPMG" (PDF). KPMG.
  7. ^ Olson, W. E., “The Accounting Profession in the 20th Century”, The CPA Journal, (July 1999)
  8. ^ For the history of accounting networks see: Stevens, The Big Six (1991); Zeff, S. A, “How the U.S. Accounting Profession Got Where jkui iujiui nit is today: Part 1” Accounting Horizons Volume 17, 189–205 (September 2003). Zeff, S. A, “How the U.S. Accounting Profession Got Where it is today: Part II” Accounting Horizons (September 2003)
  9. ^ Baskerville, Hat, Globalization of professional accounting: The Big 8 entering New Zealand (June 2007) citing Greenwood, Cooper, Hinings, and Brown, “Biggest is best? Strategic assumptions and actions in the Canadian audit industry” Revue Canadienne des Sciences de l’Administration 10(4) 308–322 (1993)
  10. ^ Freidheim, Cyrus, The Trillion Dollar Corporation (1999)
  11. ^ Aharoni “Internationalization of Professional Services: Implications for the Accounting Profession” in Brock, Powell and Hindings, Restructuring the Professional Organization (1999).
  12. ^ American Inst. of Certified Public Accountants, 113 F.T.C. 698 (1990)
  13. ^ Kyle, McHatton,. "The top 30 accountancy firms 2017". Retrieved 2018-03-12.
  14. ^ Networks Survey: global risk, Accountancy Age Smith, Phil November, 2008 Code of Ethics 290 revised the determination. It should be “made in light of whether a reasonable and informed third party would be likely to conclude that a network exists. A referral network is not a network by this definition. The shared costs must be significant. Common quality system and business strategies are important considerations.”
  15. ^ OECD Report: Conflicts of Interest in Accounting and Auditing
  16. ^ Karen Kroll, Get This: Accounting Firms are backing more regulation, CFO World Newsletter February 15, 2011
  17. ^ Plans Grow for European Audit Cop, Wall Street Journal October 12, 2010
Big Three (management consultancies)

The Big Three or MBB refers to the name colloquially given to the world's three largest strategy consulting firms by revenue. They are also considered the most prestigious employers in the management consulting industry. McKinsey is the biggest of these with an annual revenue of $8.8bn (2016) followed by Boston Consulting Group ($6.3bn revenue; 2017) and then Bain & Company ($3.8–4.5bn revenue; 2017 estimate).


Business is the activity of making one's living or making money by producing or buying and selling products (such as goods and services). Simply put, it is "any activity or enterprise entered into for profit. It does not mean it is a company, a corporation, partnership, or have any such formal organization, but it can range from a street peddler to General Motors."Having a business name does not separate the business entity from the owner, which means that the owner of the business is responsible and liable for debts incurred by the business. If the business acquires debts, the creditors can go after the owner's personal possessions. A business structure does not allow for corporate tax rates. The proprietor is personally taxed on all income from the business.

The term is also often used colloquially (but not by lawyers or by public officials) to refer to a company. A company, on the other hand, is a separate legal entity and provides for limited liability, as well as corporate tax rates. A company structure is more complicated and expensive to set up, but offers more protection and benefits for the owner.


Capco, first known as The Capital Markets Company N.V., is a global business and technology consultancy with 28 offices across four continents: Europe, North America, South America and Asia. Founded in 1998, Capco focuses on financial services, including banking and payments, capital markets, and wealth and asset management. It also has a dedicated energy division in the US.

Capco’s 4,000+ professionals offer consulting expertise, complex technology transformation, and managed services.

Its global headquarters are in London, UK. In December 2017, Capco opened a new office in Charlotte, North Carolina.

Grant Thornton International

Grant Thornton is the world's seventh largest professional services network of independent accounting and consulting member firms which provide assurance, tax and advisory services to privately held businesses, public interest entities, and public sector entities. Grant Thornton International Ltd is a not-for-profit, non-practising, international umbrella membership entity organised as a private company limited by guarantee. Grant Thornton International Ltd is incorporated in London, England, and has no share capital.

According to Grant Thornton International Ltd, member firms within the global organisation operate in over 130 countries employing over 53,000 personnel for a combined global revenue of US$5.45 billion.

Hitachi Consulting

3 January 2002Hitachi Consulting Corporation is an American international management and technology consulting firm with headquarters in Dallas, Texas. It was founded in November 2000 as a subsidiary of the Japanese corporation Hitachi, and it currently employs approximately 6,500 people in the US, Japan, Brazil, China, India, Portugal, Singapore, Spain, the UK, Germany, and Vietnam.

IBM Global Services

IBM Services is the professional services arm of IBM, made up of business, technology and industry experts who apply advanced technology and help clients design, build and run businesses. It includes two divisions: IBM Global Business Services (GBS) and IBM Global Technology Services (GTS).

Information technology consulting

In management, information technology consulting (also called IT consulting, computer consultancy, business and technology services, computing consultancy, technology consulting, and IT advisory) as a field of activity focuses on advising organizations on how best to use information technology (IT) in achieving their business objectives.

International Accounting Bulletin

International Accounting Bulletin is a monthly accountancy trade magazine that covers the global accounting business. It is also known under the acronym IAB.


Milliman, formerly Milliman & Robertson, is a large international, independent actuarial and consulting firm, with revenues of $838 million in 2014. Founded in Seattle in 1947, by Wendell Milliman and Stuart A. Robertson, the firm operates 59 offices worldwide with over 3,000 employees, including more than 1,300 consultants and actuaries. Milliman is owned and managed by approximately 350 principals. Milliman's primary business includes consulting practices in employee benefits, healthcare, investment, life insurance and financial services, and property and casualty insurance. Clients include a spectrum of business, financial, government, union, education, and nonprofit organizations. The firm also provides data analysis, predictive analytics, and big data services.

Professional services

Professional services are occupations in the tertiary sector of the economy requiring special training in the arts or sciences. Some professional services require holding professional licenses such as architects, accountants, engineers, doctors and lawyers. Other professional services involve providing specialist business support to businesses of all sizes and in all sectors; this can include tax advice, supporting a company with accounting, IT services or providing management advice.

Professional services networks

Professional services networks are networks of independent firms who come together to cost-effectively provide professional services to clients through an organized framework. They are principally found in law and accounting. They may also be found in investment banking, insurance, real estate and architectural services. Any profession that operates locally, but has clients in multiple locations, are potential members of a network. This entry focuses on accounting, legal, multidisciplinary and specialty practice networks. Today members of these networks employ more than one million professionals and staff and have cumulative annual revenues that exceed $200 billion.The accounting networks and associations developed first to meet the requirement of the SEC of public company audits. They include the well-known accounting networks like PwC, Deloitte, Ernst & Young and KPMG (also known as the Big 4 Audit Firms) as well as more than 30 other accounting networks and associations. They are highly structured entities.

The law firm network developed in the late 1980s. They include legal and law firm based multidisciplinary networks like Lex Mundi, World Services Group, TerraLex, Meritas, and the State Capital Group.

There are more than 175 known networks in law, 40 in accounting, and 20 specialty networks. Individual networks have revenues exceeding $20 billion.


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Protiviti was formed in 2002 when the Company hired more than 700 professionals who had been affiliated with the internal audit, business and technology risk consulting practice of Arthur Andersen LLP, including more than 50 individuals who had been partners of that firm. These professionals formed the base of Protiviti.Protiviti is listed as Forbes best management consulting firm in 2018. Protiviti has also been listed as the 100 Best Companies to Work For by Fortune Magazine for 5 consecutive years in 2019.


Sogeti is the Technology and Engineering Services Division of Capgemini. The Sogeti Group is an information technology consulting company specializing in local professional services, with headquarters in Paris, employing around 25,000 people at around 300 branches in 15 countries. The current CEO is Hans van Waayenburg, and in 2011, the company turnover was 1.5 billion euros.

Towers Watson

Towers Watson & Co. was a global professional services firm. Its principal lines of business were risk management and human resource consulting. It also had actuarial and investment consulting practices. In January 2016, Towers Watson merged with Willis Group to form Willis Towers Watson.


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