There are hundreds of thousands of accounting firms in the U.S., but only a select few have the resources, expertise, and reputations to handle the accounting needs of the largest U.S. and international corporations.
These top accounting firms, sometimes known as the "big four," have the most employees, the highest-profile clients, and the biggest profits. They provide auditing, tax advisory, risk-management services, and financial advisory. Together, they control about 80% market share of all public company clients.
What are the top accounting firms?
To command so much market share among public companies, these top accounting firms share many common features. They all offer complete product and service offerings. They all employ hundreds of thousands of employees. They all do business across the globe. And they all bring in billions and billions in revenue each year.
By revenue, KPMG is the smallest of the top accounting firms. Even as the smallest of the lot, the partnership generated $24.8 billion in revenue in its 2014 fiscal year. The auditing business is the company's largest, with most of its client work coming from the European, Middle Eastern, and African market. KPMG has more than 162,000 employees.
Ernst & Young
The next accounting firm up the size ladder is Ernst & Young. With 190,000 employees globally, the firm generated $28.7 billion in revenue in its 2014 fiscal year, edging out KPMG by about 16%. Like KPMG, Ernst & Young also has its largest business concentration in the EMIA region, driven primarily by its work in the financial and capital markets sector.
The next two firms have comparable revenue, so we'll switch to total employee count to differentiate them. That puts PriceWaterhouseCoopers, commonly called PWC, up next with its 208,000 global workforce. PWC's assurance business is its largest, contributing $15 billion to the year's revenue. However, the advisory business was the firm's fastest growing, reaching $11 billion in revenue thanks to its 18% growth for the year. PWC's clients include 418 of the 500 companies listed on Fortune's Global 500 list of the largest companies in the world.
Finally, we come to Deloitte and its massive 225,000 global workforce. Deloitte also reported $35 billion in revenue in its 2014 fiscal year, which is 22% more than Ernst & Young, and 41% more than KPMG. Like Ernst & Young, Deloitte's largest business is in the financial services sector. Its consulting business is its largest earner, followed by its auditing business.
The rest of the industry stands in the shadow of these top accounting firms
There are other large and prestigious accounting firms. McGladrey, Grant Thornton, BDO, and others are all highly respected, large accounting firms. However, the gap between the top four and the rest remains huge. McGladrey, for example, was the fifth largest accounting firm by revenue in 2014, with $1.3 billion on the top line. Fourth place KPMG had 19 times that much.
In that context, it's clear that the top accounting firms are also the elite firms known as the "big four." For the largest U.S. and international companies, these four stand above the rest.
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