When I was in graduate school, and being recruited to the Big Eight (no, not what is now the Big Twelve), I spurned them all. Can anyone name the big eight accounting firms from 1985? [Answer below]
We’re currently at a Big Four; however, one of the four, KPMG is in deep trouble. KPMG set up tax shelters in the late 1990’s. The IRS didn’t think they were legal. KPMG has now acknowledged that they weren’t legal. Oops.
I haven’t been covering this story, because others are doing a great job. (Why reinvent the wheel?) Most newspapers have had stories, including this story from Reuters and this story from the New York Times. The blogosphere is also delving into this: The Tax Professor Blog has a roundup. Roth Tax Updates is also covering the subject.
I remember when Arthur Andersen went away. While I doubt the government is stupid enough to indict KPMG, it wouldn’t surprise me. Is the entire firm guilty? Of course not—just a few partners. But if I were a new college graduate, I wouldn’t want to work at KPMG.
Whither the Big Eight:
Arthur Andersen: Dead, 2002 (US “won” in court in a case that was recently overturned).
Arthur Young: Merged with Ernst & Whinney in 1989 to form Ernst & Young.
Coopers & Lybrand: Merged With Price Waterhouse in 1998 to form PriceWaterhouseCoopers.
Deloitte Haskins: Merged with Touche Ross in 1989 to form Deloitte Touche.
Ernst & Whinney: Merged with Arthur Young in 1989 to form Ernst & Young.
Peat, Marwick & Mitchell: Merged with KMG (Klynveld Main Goerdeler) Main Hurdman in 1986 to form KPMG Peat Marwick (since shortened to KPMG).
Price Waterhouse: Merged with Coopers & Lybrand in 1989 to form PriceWaterhouseCoopers.
Touche Ross: Merged with Deloitte Haskins in 1989 to form Deloitte Touche.