Business

Big4 of audit services EY, PwC, Deloitte and KPMG earned minors in main sector

June 02, 2018 | 08:49 AM GMT+7

Together with providing auditing service, Big Four also participates in other professional activities such as offering consultancy for investment procedures, tax, legal issue and other financial activities, which account for the major part of Big4’s revenue.

The Big Four accounting firms. Photo: Buzzfeed.

Big Four (Big4) is the four largest professional accounting firms in the world including PwC, KPMG, EY and Deloitte. These firms handle most of the audit work for the largest publicly traded companies in the world as well as many other private companies, creating a monopoly in the global audit industry.

Considering the total revenue of $40.6 million, EY was the top earning firm last year following by PwC with $37 million, Deloitte with $28.3 million and KPMG with $19.7 million.

The transparency report of PwC shown that the revenue from auditing service was only $873,000 in 2017, while its total revenue went up to $37 million. Thus, the auditing revenue was only accounted for two percent of the total revenue.

Although the total revenues of Big4 are quite large, the profits of Big4 in Vietnam are relatively small. In 2017, EY’s profit was $254,000 and as for KMPG, their profit was only $34,000.

High staff cost is the main factor contributing to the extremely low profits of Big4, which accounts for 60 percent to 70 percent of the total cost.

Specifically, across the globe KPMG spent $14 billion for staff cost in 2017, equivalent to the average staff cost per auditor is $351,000 per year. EY has the highest average staff cost, about $373,000 per person annually.

This figure is fairly different comparing to other auditing companies in Vietnam asides from Big4, such as AASC, a large-scale audit firm in the domestic market that has an average employee cost of about $88,000 per person annually. 

In addition, the competition amongst auditing units becomes increasingly brutal over the years. Not only Big4 but also some other large audit firms such as A&C, AASC and AAC also join the race of obtaining auditing packages for businesses through discounting their services. 

KPMG had to reduce their price up to 47 percent to win one of the very large scale bidding packages namely auditing package for 2016 - 2018 financial statements of Vietnam Airlines, which had a value of $517,000.

Even Deloitte Vietnam had to offer a discount to win an over $440,000 package, of which Deloitte will have to provide a review service for semi-annual financial statements, audit annual financial statements and audit the operation of the internal control system of BIDV for the fiscal year of 2016 and 2017.

Big4 has been in Vietnam since the day the country opened its market to the world. As the domestic economy becomes more integrated into the world, the position of Big4 also enhances significantly.

Currently, most of the largest capitalization companies in Vietnam such as Vingroup, Vietcombank or Mobile World are all customers of Big4 auditing companies. 

 

US giant backs Vietnam’s bid to lead ASEAN gas trade

US giant backs Vietnam’s bid to lead ASEAN gas trade

Business -  6 day

With strategic deals and strong policy alignment from the Vietnamese government, Excelerate Energy aims to anchor Vietnam’s LNG ambitions in the region.

Frasers Property, SPX Express sign deal for largest sorting centre in Southeast Asia

Frasers Property, SPX Express sign deal for largest sorting centre in Southeast Asia

Business -  1 week

Scheduled for completion in 2027, the logistics facility will be the first of its kind in Vietnam significantly boosting parcel processing capacity up to 7 million parcels daily.

Gamuda Land secures VND3,750 billion loan for Eaton Park project

Gamuda Land secures VND3,750 billion loan for Eaton Park project

Business -  2 week

Gamuda Land will use the loan to invest in a luxury real estate project in Ho Chi Minh City.

WHA Group accelerates industrial park investment in Vietnam amid tariff tensions

WHA Group accelerates industrial park investment in Vietnam amid tariff tensions

Business -  3 week

Amid global economic volatility, WHA Group has rapidly rolled out multiple expansion projects in Vietnam, signaling its strategic focus on the country.

Hai Phong Port unveils new deep-water terminals to meet growing trade demand

Hai Phong Port unveils new deep-water terminals to meet growing trade demand

Business -  3 week

Hai Phong Port JSC. has inaugurated international container terminals No. 3 and 4 at Lach Huyen, raising its throughput capacity to 3.5 million TEUs per year.

Hoang Huy Group to raise $79 million for Haiphong property projects

Hoang Huy Group to raise $79 million for Haiphong property projects

Business -  4 week

Hoang Huy expects revenue to exceed VND4 trillion and post-tax profit to reach up to VND2 trillion in fiscal year 2025-2026, targeting annual growth of over 30% for the next five years.