Big 4 Leaving Audit Behind As Advisory Revenues Grow

Big 4 Leaving Audit Behind As Advisory Revenues Grow

Advisory services now total 40% of all revenue for the Big 4 firms, according to GlobalData’s International Accounting Bulletin World Survey 2020.

Audit and accounting services trail behind, only generating 34% of the Big 4’s total income for 2019.

The revenues generated from different service lines has changed dramatically since 2008, when audit and accounting services amounted to 52% of total fee income, and advisory a mere 24%, reports the International Accounting Bulletin, which tracks fee income and staff information from accounting networks and associations.

Overall, Deloitte had the greatest share of its fee income generated by its advisory practice, with it making up 60% of its total global revenue. KPMG also generated more revenue from advisory services (40%) compared to its audit practice (38%). PwC and EY still had more fee income come from their audit practices, but that gap is narrowing slowly.

While the audit and accounting service line and the advisory service line have almost switched places in terms of fee income, tax has remained fairly consistent. In 2008, tax made up 24% of total fee income, and then in 2014 and 2019 it remained steady at 23%.

“As there is growing pressure in a number of jurisdictions to separate, either operationally or legally, audit and non-audit practices, it would be interesting to see which business the Big 4 giants would choose to keep if a decision had to be made,” says Joe Pickard, GlobalData’s The Accountant editor. “I suspect it would not be a hard choice between the heavily regulated, increasingly scrutinized audit, or the less regulated, lucrative gravy train that is the advisory business.”

Outside of the Big 4, audit and accounting services still make up 49% of fee income, compared to 25% from tax and 19% from advisory services. The services line breakdown has seen little change since 2008 when audit and accounting made up 53% of their total fee income.