Audit Firms: Too Few to Fail

In a commentary, reprinted with permission from FTC:WATCH No. 779, the AAI expresses concerned about concentration in the audit industry. Although there are thousands of accounting firms, very few have the resources and expertise to conduct audits of large multinational banks and corporations.  The Big 4 accounting firms, Ernst & Young, together with PricewaterhouseCoopers, Deloitte Touche Tohmatsu, and KPMG, are huge privately-owned international networks that employ over 600,000 worldwide.  Each firm earns $20 billion a year or more.  They audit the financial statements of nearly all of the world’s public companies with annual sales over $250 million and, arguably, are the only audit firms able to do so.