Ernst & Young and The Other ‘Big Four’ Auditors

The ‘Big Four’ auditors,namely Ernst & Young, KPMG, Deloitte and Pricewaterhouse Coopers are the largest auditing firms currently operating in the world. The regulators at the Office of Fair Trading have gone as far as to say that these four auditing companies have a stranglehold on the auditing market in the United Kingdom.

According to auditing statistics in 2010, 99 members of the FTSE 100 were audited by these big four firms. In addition, companies change their auditors every 48 years, leaving very little chance of change. However, this is not just about loyalty as it is about answering to their investors in switching auditors (for example, from PwC to a smaller auditor) . As it can be an expensive change for the company.

On the other hand, even if the company in question wishes to hire a smaller auditing firm as opposed to  KPMG or PricewaterhouseCoopers, the smaller firms normally leave FTSE companies to the bigger players because it is considered to be risky.

One of the biggest advantages that the “Big Four” have is that they have an extensive international network in comparison to the smaller auditing firms, making them the obvious choice for FTSE companies to hire for auditing purposes.