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What goes wrong when accounting firms become consultants

A photo of PricewaterhouseCoopers' DC office.
REUTERS/Mike Stone
What business are accounting firms really in?
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At the big accounting firms, consulting is the tail that wags the dog.

It’s an open secret in the accounting industry that the biggest audit firms no longer get the bulk of their business from auditing. At Deloitte Touche Tohmatsu, for instance, only 22% of global revenues came from audits in fiscal 2019, compared with 60% from consulting and other advisory services. That’s a reversal from a decade ago, when it was 46% auditing versus 33% consulting. Deloitte’s global consulting revenue rose 13% in 2019; auditing revenue was flat.

Deloitte and the other Big Four firms—PricewaterhouseCoopers, KPMG, and Ernst & Young—have all increasingly emphasized and invested heavily in consulting in recent years. It’s easy to understand why: It’s lucrative, virtually unregulated, and offers greater potential for growth than the more-mature audit field. Advising companies on digital transformation and management is less structured and offers greater creative challenges than verifying their numbers.

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