What Is the Contribution of the Caribbean and Latin American Accounting Firms to the Big Four Accounting Network?

The Big 4

The Big 4-Fee income Total (Sam) Americas Europe,Me,Africa Asia-Pacific Rank Name Growth Growth Growth 2020 2019 2020 2019 2020 2019 2020 2019 1 Deloitte 47,600 46,200 25,300 24,200 5% 15,000 15,000 0% 7,500 7,100 6% 2 PWC 43,032 44,448 18,286 17,798 3% 16,643 16,700 0% 8,103 7,950 2% 3 37,200 36,394 17,200 16,748 3% 14,200 14,149 3% 5,800 5,497 8% 4 KPMG 29,220 29,750 11,220 11,720 -4% 12,740 12,890 -1% 5,260 5,140 2% Total free income/ 157,052 154,792 72,006 70,466 2% 58,583 58,739 0% 26,663 25,687 4% Growth

The Big 4-Staff Total (Sam) Americas Europe,Me,Africa Asia-Pacific Rank Name Growth Growth Growth 2020 2019 2020 2019 2020 2019 2020 2019 1 Deloitte 334,800 312,028 149,760 139,488 7% 109,340 102,614 7% 75,700 69,926 8% 2 EY(1) 298,965 284,018 75,951 75,951 1% 117,306 114,266 3% 58,960 56,353 5% 3 PWC 284,258 276,005 72,129 73,801 -2% 121,430 117,904 3% 90,699 84,300 8% 4 KPMG 226,882 219,281 64,615 61,169 6% 114,725 111,937 2% 47,542 46,175 3% Total free 1,114,905 1,091,332 362,455 349,575 4% 462,801 446,721 4% 272,901 256,754 6% income/Growth

The Big 4-Fee and Staff

The Big 4-Fee income

Deloitte KPMG 30.3% 18.6%

PwC EY 27.4% 23.7%

The Big 4-Staff

Deloitte KPMG 29.2% 19.8%

EY PwC 24.8% 26.1% WHAT IS THE CONTRIBUTION OF THE CARIBBEAN AND LATIN AMERICAN ACCOUNTING FIRMS TO THE BIG FOUR ACCOUNTING NETWORK?

The combined global revenue of the Big Four accounting firms reached around 157 billion U.S. dollars in 2020, an increase compared to the previous year. The 2.26 billion U.S. dollar increase between 2019 and 2020 is remarkable given the current global pandemic. WHO ARE THE BIG FOUR (4)?

The four biggest accounting firms worldwide – also known as audit firms or professional services- net works – are Deloitte, PwC, EY, and KPMG. The Big Four hold a dominant share of the industry, with Deloitte holding the coveted number 1 spot amassing $47.6 Billion United States Dollars or 30.3% of the Total Big 4 revenue of US$157.05 Billion according to the International Accounting Bulletin (IAB) latest survey (See Figure 1).

Figure 1

Global Revenue Ranking Big Four Firms (USD Millions) No. 1 DELOITTE 47,600 No. 2 PWC 43,032 No. 3 EY 37,200 No. 4 KPMG 29,220 Total Global Revenue for the Big 4 157,052

Source IAB 2021 World Survey

According to Wikipedia the four networks are often grouped together for a number of reasons; they are each comparable in size relative to the rest of the market, both in terms of revenue and workforce; they are each considered equal in their ability to provide a wide scope of professional services to their clients; and, among those looking to start a career in professional services, particularly accounting, they are considered equally attractive networks to work in, because of the frequency with which these firms engage with Fortune 500 companies.

In the latest IAB 2021 World Survey published February 2021 (Issue 618) the fee income for the Big 4 of US$157.052 Billion is analyzed into 3 Regions namely:

Americas Europe, Middle East Asia-Pacific & Africa

dawgen.global/ 3 Figure 2

Total Fee Europe, Asia- Americas Income ME, Africa Pacific Rank Name (US$ M) (US$ M) (US$ M) (US$ M) 2020 2020 2020 2020 1 Deloitte 47,600 25,300 15,000 7,500 2 PWC 43,032 18,286 16,643 8,103 3 EY 37,200 17,200 14,200 5,800 4 KPMG 29,220 11,220 12,740 5,260 Total 157,052 72,006 58,583 26,663

Source IAB 2021 World Survey

It is commendable that the Big 4 achieve growth during the pandemic growing revenue from US$154.79 billion to US$157.05 billion in 2020, an increase of approximately 2%.

A GUIDE TO ACCOUNTING NETWORK AND FIRMS

The accountancy profession is part of the tertiary sector of the economy, which focus- es solely on providing services to customers; being an accountant requires specialist knowl- edge and professional experience. There are many different disciplines to the service rang- ing from simple consultancy to more complex legal issues, but the main focus is to produce detailed financial statements that determine the financial position of a company.- Inde pendent firms with strengths in the different branches of accounting have come together under a single brand name – such as Deloitte or PwC – to create professional services networks that can cost-effectively meet the needs of clients.

dawgen.global/ 4 WHAT IS THE CONTRIBUTION OF THE CARIBBEAN AND LATIN AMERICAN ACCOUNTING FIRMS TO THE BIG FOUR ACCOUNTING NETWORK?

In this article the primary focus is to get an understanding of the Contribution of the Caribbean and Latin American Accounting firms to the Big Four Accounting Network.

The Caribbean and Latin America is regarded part of the Americas. According to Wikipedia, the Americas is a landmass comprising the totality of North and South America. The Americas make up most of the land in Earth’s Western Hemisphere and comprise the New World. Along with their associated islands, the Ameri- cas cover 8% of Earth’s total surface area and 28.4% of its land area. The total population as per 2016 data is approximately 1.006 billion.

Analysis & Methodology

In analyzing the data from the IAB World Survey the following methodology is applied.

• Obtain the Global Fee Income for the Big 4 firms as per the IAB Report; • Obtain the Fee Income for the Americas as per IAB Report; • Obtain the latest data available for the firms in the USA; • Obtain the latest data available for the firms in Canada and convert to US Currency; • Extrapolate by deducting USA and Canada Fee Income from the Total Fee Income as reported for the Americas.

The latest data for the Fee Income for the USA and Canada Firms was issued by the IAB in June 2020. While these figures are not as of December 2020 they are still useful in this analysis as the financial year end for the Big 4 are: 1. Deloitte June 2020 2. PwC June 2020 3. EY December 2020 4. KPMG June 2020 dawgen.global/ 5 Figure 3

Americas Deemed Canada Firm Total Fee USA Firm Fee (US$ M) as Income (US$ M) as Income Reported in (US$ M) Reported for Latin June 2020 Rank Name 2020 in June America by IAB As per IAB 2020 by and (Currency 2021 World IAB Caribbean Translated) Survey (US$ M) 2020 1 Deloitte 25,300 21,913 2,241 1,146 2 PWC 18,286 17,373 1,365 (452) 3 EY 17,200 15,200 1,155 845 4 KPMG 11,220 9,966 1,388 (134) Total 72,006 64,452 6,150 1,404

Source IAB 2021 World Survey (Page 25)

The total fee Income for the Americas amount to Come?“ as we often must ask our sole electricity US$72 billion, which USA firms generating US$64.4 supplier (Jamaica Public Service Company) “How billion and the Canadian firms achieving Fee Income Come?”. of US$6.1 billion. This analysis indicates that the We are now asking KPMG and PWC and other total contribution of the firms in Latin America and stakeholders “How Come?” How can we have the Caribbean is approximately US$1.404 billion. Negative Fee Income? The analysis (Figure 3) raises several questions While the analysis has not fully identified the regarding the contribution of the PWC and KPMG contribution of Latin American and Caribbean firms in Latin America and the Caribbean. The Accounting firms to the Big Four Accounting Network, Analysis shows “Negative” Fee Income of US$452 we can assume that it is approximately US$1.404 million for PWC firms in Latin America and the billion. Hence with a population of approximately Caribbean while the KPMG firms shows “Negative 1.006 billion people contribute approximately “Fee Income of US$134 million. US$1.39 per capita. It is interesting to see what the Jamaicans have gotten familiar with the phrase “How Individual Countries Contribute. More to come!!

Written by: Dr. Dawkins Brown Ph.D., FCA, MCMI, ACFE

Dr. Dawkins Brown is the Executive Chairman of Dawgen Global, an integrated multidisciplinary professional service firm.

Email contact: [email protected]