Question

The "Big Four" accounting firms (Deloitte, EY, KPMG, and PwC) are coined the "Big Four" due to their market dominance in the audit and tax market in the United States. Pick ONE of the four questions below:

1. What type of chart would you use to show which accounting firm dominates in each state in terms of audit revenues?

2. Would you use the same chart for tax revenues?

3. What other ways would you recommend to these firms in finding untapped opportunities within the audit and tax market?

4. Should the firms continue to stay focused on only audit and tax, or should they explore other areas of opportunities?

Answer 1

I have picked the 4th question.

My answer:

No, the firms should not stay focused on only audit and tax and they should explore other areas of opportunities. This is because the “big four” accounting firms rely on their accounting and financial skills and expertise for the purpose of audit and tax. These skills and expertise can easily be used in other areas like transaction advisory, consulting, and business advisory.

Transaction advisory includes advisory for PE (private equity deals), M&A (mergers and acquisition deals), takeovers, privatizations etc. The “big four” firms have an in-depth financial and accounting knowledge and expertise and it can easily be extended to the transaction advisory space.

The big four firms have audited several different companies in various industries. Thus they know extensively about different industries, their competitive scenarios, their economic position etc. Their engagement in different countries has also developed their knowledge of different markets. Thus they can easily provide consulting services and business advisory services like market entry, geographical expansion, raising of capital, reducing financial risk etc.