What if KPMG collapses? The SEC is thinking about that possibility. According to the W$J, the SEC is considering relaxing the auditor independence rules. How about these numbers:
Last year, about one of every eight public companies retained three or more Big Four firms for audit and nonaudit work, according to a survey of 400 companies by J.D. Power & Associates. A July 2003 report by what is now called the Government Accountability Office found that the Big Four -- KPMG, Deloitte & Touche LLP, Ernst & Young LLP and PricewaterhouseCoopers LLP -- audited more than 78% of public companies in the U.S.
This looks like an opportunity for an accounting entrepreneur to create, probably via mergers and acquisitions, a new "big" accounting firm.
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1. Posted by Christine on June 22, 2005 @ 9:14 | Permalink
Why are there no new big accounting firms? In law, there are all kinds of sizes of firms, from one-person shops to mega-firms, and firms continually grow and shrink. What is it about accounting that has created an industry of small accounting firms focusing on small businesses and individuals and a handful of large, public accounting firms? Are the barriers to entry different and more formidable than the barriers to becoming the newest outside legal counsel for large Fortune 500 firms?
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