The existence of just four large CPA firms that service virtually all of the maj

Question

The existence of just four large CPA firms that service virtually all of the major industrial and financial companies and thus dominate the accounting profession has led to criticism through the years.

What dangers do you see from the dominance of a few large CPA firms? What advantages?

During the 1980s and 1990s, mergers among the large public accounting firms reduced the Big 8 to the Big 5. The death of Arthur Andersen (because of the Enronscandal) reduced the number to four. One reason offered for the mergers was that they improved the ability of the merging firms to provide the broad array of consulting services that provided an increasing share of the revenues of the large accounting firms. What problems do you think intensified as public accounting firms earned an ever-larger share of their income from consulting

Explanation / Answer

I think if public accounting firms earned an ever-larger share of their income from consulting then they will try to protect their client reputation, business. In that case even if the client does some unethical work and financial frauds the accounting firm will try to suppress it. It will surely lead to bad governance and impact the business enviornment and investors reliablity on accounting firms.

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