Source:

KPMG, EY, Deloitte, PwC

Genuine Impact newsletter - we do 6 -10 charts like this each week!

Tools:

Figma

This is great - but it would be much easier to read if the slices representing the same things were the same color …

seems like it’s all pretty much the same, but just named differently.

And there is absolutely no conflict of interest when they do audit and consulting at the same time...

Nah. Not at all. Just like how many large investment firms have market maker arms and hedge fund arms. They'd never, ever communicate between their branches to make boatloads of money.

Edit: lol what the hell... nice downvotes for sheer, unadulterated facts.

Good thing that hasn't been allowed for the last 20 years: https://en.wikipedia.org/wiki/Sarbanes–Oxley_Act

Heh I got this email as well

It still exists

Imagine trusting any audit opinions from any of these organizations.

Yeah, because the big four don’t help governments set policies which disadvantage the small and solo consultancies. In the UK they’ve heavily influenced the tax treatment of small companies, leaving the market open only to the very biggest. So maybe they’re not directly breaching SOx and it’s European equivalents, but they are certainly profiting from an ability to shape the market for each other.

You can see why there’s a lot of lobbying to prevent tax reform.

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They aren’t allowed to advise and audit the same client.

Most big orgs heavily enforce no conflicts of interests. A few contracts aren’t worth the loss in prestige if there are even whispers of it.

Would be more useful if terminology was consistent and you show consulting services in detail for all of them. OP just takes data from a random industry and makes a simple chart without any context.

The principles of accounting: Comparability. Not used here

My job is literally to regulate this. We slap the shit out of them if they break something as simple as this.

It's not like there are any other actually relevant auditing firms. That's exactly the point of the term "the big four". It's either these or nothing.

Need to improve your KPIs. https://www.wsj.com/articles/big-four-accounting-firms-come-under-regulators-scrutiny-11647364574?mod=hp_lead_pos3

they generally consult and audit against each other.. wont be all in house

Absolutely love these Sankey graphs GI Team, pls keep em coming!!!

yes but they are looking out for their client, not the little guy.. they are scum bags

How are you defining relevant? PWC gave evergrande a clean bill of health to help them secure more loans for gods sake. They are peak irrelevance.

You missed hiding their clients illegal profits from the authorities.

For all downvoters: do a quick search for "21 Scandals, Settlements and Corporate Crimes of Big 4 Accounting Firms in 2019", just to get an impression.

"Audit" here is a gigantic joke. They get paid to sign off accounts, if they refuse to sign off, the client threatens to get the audit done by one of their competitors, so they sign it off. EY famously signed off Wirecard's accounts just before it turned out to be a huge gangster money laundering front. Such a joke of an industry

Advisory and consulting are basically the same. A small legend and using the same naming convention would have been really helpful to make the comparisons easier between them since they all do basically the same work.

I think this promotion bot is broken.

A donut chart where the categories are different colours and in different positions so you can’t easily compare anything? I see nothing beautiful here.

Well this is actually pretty much correct, these sectors all have to be independant from eachother, eg you cant use kpmg to audit if you use them for consulting. These companies often pass clients to eachother ina you scratch my back I scratch yours. Its partly how they manage to keep eachother in the top spots.

The industry term is tax avoidence.

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Funny how they all spell tax evasion services in such different ways

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EDIT : Big Four accounting firms are key drivers of tax haven use, new research says

What can I say, I love me my Sankeys!!!

Stacked bar chart would have been a better visualization

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FYI, coming from an ex-EY employee - Audit and Assurance are the same thing

As someone who used to work in EY audit, the level of compliance and standards these days (after SOX) are pretty damn high. Every opinion has to filter through all levels of the firm (staff to partner) before it is signed off, and peer reviews are regular. It’s a pretty are tight system these days. I’m sure corruption still happens, but I never saw it, and the standards are high.

What a dumb take. There is a reason companies pay $$$ to get audit opinion from trusted companies instead of smaller ones.

Lol, the education level in this comment section is lower than reddit in general.

people saying audit is a joke because of a handful landmark problems… when the fortune 500 and thousands and thousands of other companies have used these firms with no issue

The Big4 are quite active in consulting business at large financial institutions (at least in Germany). At the same time, there are only these 4 audit firms and auditors must change every few years. Thus, the likelihood that the same company is consulting and auditing the same client at the same time, or in short succession, is quite high.

The official "solution" to this potential conflict of interest is that 2 different sections of the big4 company do consulting and auditing. But I do not know how solid this separation is in practice.

They aren’t allowed to consult and audit on same client. EY is spinning out their consulting business as a separate company and the other 3 are considering it as well.

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Assurance and audit are pretty much the same thing too.

This is why EY is splitting their consulting and audit business.

Dude audits are mandatory by law..

HSBC audits a total wash

https://www.reddit.com/r/Accounting/comments/xrc60a/deloitte_china_allowed_clients_to_do_own_audit/

Not just PWC. To my understanding Big 4 in China is more like licensing out of brand name than actual Big 4. The regulatory environment there is entirely different and there are scandals left and right. It is not really fair to compare B4 China to the arms elsewhere which typically at least try to provide quality work. Whether or not they do is a different argument but audits in China are pretty much meaningless due to corruption.

That's not how that works.

Exactly lol. These companies are the biggest tax/ consultancy/ auditing firms in the world.

It turns out they all generate huge revenue from tax/ consultancy/ auditing.

Shocked pikachu

But but but they're in brand colour!

/S

Damn, thats a lot of wasted money

Taxes bring out the worst in redditors

As someone who works in tax at Deloitte, I can assure you this isn’t something we do

You screw up at the Oscars once and people lose their minds… /s

Hiding the corruption is the only job the CEO has. Seems like they are doing their "job", too.

And even then I always thought Deloitte had a more blue color scheme

In the Netherlands Deloite is nicknamed Delouche. Louche can be translated as shady. I really don't know how that happened. /s

Auditors are giant joke. They understand jack shit from numbers they’re looking at.

Seeing problems where there’s none, completely missing out methodology client applied that intentionally or not (I can’t believe I’m saying this, but both consultants and accountants as high up as cfo, understood shit of what data were screaming to me) was over reporting some stuff.

And if everything was labeled the same (instead of consulting & advising as separate terms, name them the same!)

Advising and consulting seems to be big business

The companies’ services aren’t structured the same way though so that’s not really possible

Also consistent colors. Make all the tax work yellow or whatever. Not beautiful.

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Do y’all also get an icky feeling with these companies? Like they’re the sleazy accountants and enforcers for multinationals? Allowing them to do dirty business, push legal boundaries, squeeze small countries for all they’re worth and basically help them get away with all kinds of shit?

Sounds like it’s pretty clear how the nickname spread, considering you were under the impression what they do is shady

Can confirm. Bill $385-405 per hour.

The accounting industry has been very heavily regulated since twenty years ago.

You win, this is the dumbest comment in the whole thread. Not because of the take per se, but because you sound like 'geeks' in TV shows when script calls for "technospeak", you have no clue what you are talking about.

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That is a very, very different point than was originally made.

The likelihood is very damn low. I worked at a Big4 in consulting, not being able to service audit customers was a huge problem for us and simply cut our addressable market by 25% (assuming that there are only four audit firms and we were one of them). I think technically to some amount it could be exempted but in practice it was as good as impossible.

The fact that this is upvotes speaks volumes about how much you should trust comments and opinions on Reddit.

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Why would you not include percentages??

Bar charts would also have been nicer. One of the things you (hopefully) learn at these firms is to avoid pie (or doughnut) charts.

Consulting and advisory are pretty different. But there other options for consolidation. The advisory’s within deloitte could be combined. S&T with EY is basically advisory. Interesting that consulting isn’t broken out for PwC and KPMG.

well the colors are the company colors.

Your first point is true, but your second point is pure conspiracy. These firms work on the largest companies due to a multitude of reasons, but not the one you listed. Primarily due to: staffing, geographical presence, reputation, etc.

I’ve worked on audits where a competitor (big 4) was doing advisory work and constantly trying to get management to switch to them for audit work. There is very much no back scratching.

Drop this in r/accounting and wait for the show

Consultants are ruining America

Advisory is basically audit…

This chart looks fine but once you read the labels it’s less than useless.

Which is also similar to Tax and Legal services

Finally, someone gets what's important.

Tax is usually a separated out line of service to audit/assurance. Typically it’s audit, consulting, deals and tax as the main 4 lines of service.

Advisory and Consulting at Deloitte at least are quite different—and pay quite differently as well.

Sorry about that. I am data fixated geek. Which part would you like me to explain? I can provide examples as much as I can disclose? Been doing regulatory and auditory reporting for few years now, and academic/fixed templates minds have 0chance to see what’s wrong with numbers based on process explanations that been provided, but will be picking up on most irrelevant nuances like I don’t know rounding numbers on excels they provided. Maybe it’s just my experience or maybe other people don’t care so much- don’t know.

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I can’t speak for audits but it’s true the industry is a joke. You pay $400 an hour for consultants and you get grads with zero industry experience.

It’s a sham. Good businesses don’t use or need their consultants. Why would you pay that kind of money for jumped up PowerPoint grifters?

Obviously. Which makes it very challenging to compare and therefore not a good presentation of data.

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Brand colours but the PwC logo is completely off brand!

EY about to spin off that consulting division

They legally can’t do consulting work for clients they audit, I worked at EY consulting for 5 years and it was a pain because we were missing out on huge projects, hence why they’re spinning off consulting.

Literally part of the proposal process is making sure there are no audit restrictions. (I worked at EY for 5 years in consulting)

You don't have the foundational knowledge about the topic to talk about it; this is evident from your comment about 'methodology', and the lack of understanding of what exactly is an audit and how audits are performed. There are lots of bad auditors out there, but Big4 know what they are doing with some minor exceptions (like in any field), your blanket statement about auditors is the same as yelling "I have no clue what I'm talking about".

Also, as self proclaimed 'data geek', maybe open a wiki article, it will clearly explain why audit is not 'a joke'.

PS if a high level wiki article knows more than you about a given topic, maybe consider not going around sharing your opinions with such confidence.

You jest, but my god if we put something out even internally without the Green Dot there is hell to pay.

Fucking awful chart. No consistency.

have these companies ever created something to help mankind progress in any way? all of these words scream bureaucratic complacency and money laundering to me

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"breaking down how they make their money"... Seem to be missing a category for "not paying overtime to associates who constantly work 60-80 hour weeks"

What do you know about the topic? Seriously? I’ve been through audits first providing data then helping finance to answer follow up questions as I know more about operations than they do- maybe not the biggest company, but not small either.

I developed audit strategies and methodologies, led a number of audits of international multi-billion and smaller companies as part of Big4, including pre-IPO, US/UK/IFRS/SOX, as well as went through those audits as a client FP&A. I also developed curriculum for my Big4 that thousands of audit new hires went through.

You have a case of Dunning-Kruger.

Ohhhh that’s why you felt so pressed. Good for you. My experience is different - maybe we should hire you then. I considered seeking for job there, but doesn’t like the fact that me finding out the dirt won’t make me popular. After all, one side can’t exist without the other so……

I don't feel pressed, no need to make assumptions, we already know you keep missing. I have left the field years ago and have no interest in it.

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I agree with you, but just been attacked by the auditors side, also other guy in comment saying you’re getting graduate for crazy money. It’s a joke. I can confirm. Auditor asking for a definition of the most fundamental aspect of our business at the end of audit where it was mentioned in various contexts to explain numbers is just embarrassing. The chief accountant said something along lines that it was most painful moment in his career. It means he understood jack shit from the whole process and just ticks the boxes.

Hope it was a loss for the industry. Your assumptions about me are extremely wrong.

Without Deloitte and PwC the US government would not be able to function. Accounting services are necessary for corporations to function. Without them, corporations performance is immeasurable and the entire financial system would collapse. Very significant number of corporations and governments rely on these companies to manage accounting and operations.

Just cuz you do not understand what they do, that does not mean it is money laundering. And who does money laundering in a business where all its revenue comes from large contracts and 90% of their expenses is salary. That is the dumbest money laundering concept ever.

Sorry buddy, you need more than “feelings” here. And the majority of these companies revenue comes from US and Europe. Not exactly “small” countries.

Technically Audit is a service under assurance. But for lamans, yes

Not true at all. Very different service lines.

I know. Most people do not even understand what these companies even do.

Per country stats would be nice.

Ya, these companies do 10s of thousands of audits. Not to mention have individual partners that make decisions. Just cuz 2 dozen of audits are defective that does not mean the industry is a “joke.” Ask anyone in the financial, banking or even government, what will happen if these services are stopped. Absolute chaos.

My money don't jiggle jiggle, it folds

Ya, 10s of thousands of audits are performed every year. However, those 21 defective audits are a large enough sample to represent all the thousands of partners and hundreds of thousands of employees who work in these corporations. Bullet proof logic there.

Great place to start a career. Terrible place to make a career (Ex KPMGer here)

Yes - intrigued to learn the distinction b/n advisory services and consulting.. I’ll hang up And listen

I worked in both audit and advisory…. but okay.

As an ex KPMG employee myself, I can confirm that this statement is true.

For us outsiders, what does "assurance" refer to?

The difference is basically branding and how the companies split the different offerings. Effectively they can all he called consulting or advisory. EY specifically rebranded from advisory to consulting a few years back without changing business models at all.

This isn’t exactly true, a lot of what Deloitte includes under “Risk Advisory” would be considered “Advisory” at KPMG for example.

What kind of advisory were you doing that was similar to audit? Current auditor with lots of advisory friends so I’m pretty familiar as well.

I see SOX implementation, M&A advisory, IT Advisory, etc. none of which I would consider similar to audit.

SOX readiness, as well as implementation, IT advisory, Internal Audit, Business Processes & Controls I did them all as part of “advisory” at green dot.

Very similar to audit, not sure why you think it’s so different, business controls are business controls the IT portion can be taught, internal audit/risk can be taught.

I touch a ton of M&A/deal work (mainly under ~$100M deals) as a head of finance for a private retailer, but again, it’s not all that different from audit.

What’s the difference between consulting and advisory

Right, the other assurance service is review

Yeah this chart is just useless.

Not useless. Yeah, could have normalized the service names, but essentially this is saying Deloitte has a $37bn consulting business versus EY and PwC having roughly $20bn consulting business versus KPMG coming in at $13bn

Deloitte never spun consulting so they have a massive lead hence the outsized revenue

Transactions and risk advisory is typically part of consulting or advisory, as some firms call it

Let us not forget there used to be a “big 5”, but Arthur Anderson went belly up after the Enron debacle.

I’ll never forget that partner testifying in front of Congress. He kept saying we followed GAAP

These are probably their department names within the company, and Deloitte and EY probably just have enough consulting business to have their own department.

Not Deloitte, but used to work for a big company that was as zealous about their logo / stylebook.

I once had the audacity to make a totally internal-only powerpoint where I had a little stick figure guy with the company's logo for a head, just a fun little anthropormophization to make dry material a little more interesting.

One of the marketing execs was in the room. i swear you would have thought I sacrificed a puppy during that meeting, for how outraged and even revolted they were by that.

How is the separation done? Are these 2 different legal entities? Are they located in different buildings? Do they have different owners? Is there an overlap / exchange of employees?

The brand names are obviously not different.

Hard to do consistent terminology as the firms have different service line categorizations. For example, EY and KPMG terms Risk Advisory as "Consulting" while PwC terms Risk as Assurance, and Deloitte groups it in its own category. That's just one example. I think Financial Advisory is the same kind of inconsistency amongst the 4.

Deloitte uses both Consulting and Advisory though.

Assurance is audit.

Advisory is consulting.

I know that. But look at the Deloitte breakouts. There's Risk Advisory, Financial Advisory, and also Consulting. Deloitte breaks it out differently than the other 3 do. Financial Advisory, is known as FAAS at EY - Financial Accounting Advisory Services but it's a joint venture between Assurance and Consulting and the revenue is split between the two service lines at EY, while at D it's its own category.

I've worked with EY & PWC, their tech consultants are absolute nonsense that they hired 2 months prior to work on your project. It's no different than a branded manpower bodyshop.

Yeah. That's why America is fucked. Consultants.

This is really confusing, how am i gonna make use of this chart when labeling and coloring are all over the place

Stop heamorrhage pointless graph like this, data should be meaningful, looking nice come after.

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And since the colors aren't consistent for the different services, you have to read the labels for each one to compare them.

Meaning this graphic is less useful when comparing the four than a small paragraph of text with the same information. Which defeats the purpose of it being a visual representation of the data in question.

It’s regulated by the US and other local governments. There are internal processes that are also in place to prevent the conflict of interest.

Interesting that it’s only ~30% of business- when they talk about the split being 50/50…

I have just started working at KPMG (its been 6m already). Based on your comments can you clarify more why is that so ? I want to leave already due to their work&life balance. Here in Uzb we have to work even on weekends to meet the deadlines. I presume that at higher lvls its even harder to find a free time

3$ is pretty good Here in Uzb they give 700$ per month for Audit Assistant 2lvl poss

Assurance = auditing, but can refer to both financial audits and non-financial audits (e.g., internal controls over regulatory areas).

None, really. It will just be consulting by a different name but focused on a particular business sector.

To the haters on so many of the top posts here, these groups are not apples to apples between companies and no way to line them up. I've worked at two of these companies and the divisions shown in this chart are the actual names by each company.

Consulting would basically take everything but assurance practice and like 30% of tax because they're necessary for audits.

I think the bigger takeaway is that this chart is useless because there’s no real world application for any of the data. Revenue doesn’t tell a story. We all know that 4 firms have an oligopoly, collude on billing rates, don’t need to compete with one another, have barriers to entry, and the government protects them.

You have no idea what you're talking about. Anyone can create their own CPA firm and there are tons of those.

Oh right, I forgot about all those small firms that provide consulting, tax, and audit services to public companies, and sit on the boards of public companies. 🙄

Oligopolies are indefensible. I find it odd that anyone would argue that they don’t exist and/or defend them.

Yes you actually forgot about them. RSM and Grant Thornton and many others have public clients.

Lol collude on billing rates. These firms absolutely compete with one another. It's some of the most competitive behavior I've seen in any industry.

The government does not protect them. Please read up on the PCAOB. No one is forcing their clients to work with them. Clients can always choose to change firms. Idk what you're talking about.

Also they're not really an ogilopolu since firms like GT and RSM also have large assurance practices

Audit is a type of assurance

To say that middle market firms compete with the big 4 for public company clients is laughable.

The colors are the company colors and I can’t understate how strong their branding is. If you go to school for accounting they bombard you with their recruiting/marketing constantly. To the point where they explicitly will sponsor professors at some schools.

You joke but they have REALLY strong brand identities in the accounting world it would be one of those mildly infuriating things if it was off

I’ve been on both sides for many years. Billing rates are basically the same across the big 4 and across middle market (RSM, GT, BDO, etc.). In my experience, billing rates were very rarely the deciding factor in winning a new audit client or selecting a firm for audit, tax or consulting.

RSM is the 5th largest firm worldwide, and is not even close to the top 4. The top is controlled by the 4 firms listed here, with little to no competition from other smaller firms.

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https://www.theatlantic.com/ideas/archive/2020/02/how-mckinsey-destroyed-middle-class/605878/ Not exclusively but this is a good read!

A summer intern made this and was freaking out the whole time, please be kind.

PwC sold their consulting arm a while back to IBM, maybe that’s the reason for the different terminology?