The Big Four

Gow and Kells trace the history of the accounting profession from its nineteenth-century origins through the consolidation that produced Deloitte, PwC, EY and KPMG, and examine what the firms have become.

The historical material covers the founding partners, the development of the audit as a statutory requirement, the firms' expansion into consulting and tax, the merger wave that reduced the Big Eight to the Big Five, and the Andersen collapse that produced the current four. They also cover the peculiar legal structure: each Big Four firm is a network of national partnerships bound by contract rather than a single entity, which limits liability across borders and makes the firms difficult to hold accountable or to regulate as a whole.

The critical argument concerns what the firms actually do. Audit has become a low-margin compliance product that the firms cross-sell from, tax practice has moved toward structuring that governments then attempt to close, and consulting has grown to dominate revenue despite the conflicts that produced the Andersen collapse and the reforms that followed it. They document repeated audit failures and note that the firms' market position is protected by regulation requiring audits and by the fact that only four firms can serve large multinational clients.

The book is well researched and written for a general audience. It is stronger on history and structure than on proposals, and its suggestions for reform are sketched. The concentration problem it identifies has since become a live regulatory question in Britain and elsewhere.