Will there be an end to the big 4 after the recent announcement of the split up of EY?
Ey announced that they will be splitting up their audit and consulting branches into two firms. They are doing this as a result of regulation around the globe. This regulation has limited their ability to win new clients. They have conflicts of interest that do not allow them to do certain consulting work for their clients.
As a result of this split up, it might seem like there will be 5 big accounting firms immediately after the split up. However, this is incorrect.
The assurance firm created after the split up will maintain the EY name. That will be the accounting firm. The consulting firm that breaks off and goes public will not primarily be an accounting firm. It will be a consulting firm.
The big 4 will remain and they will still be the same except that EY will be smaller than KPMG. KPMG will be the 3rd largest accounting firm in the world atleast until they break up their firm.