![]() The traditional Big 4 accounting firms in the United States are Ernst and Young KPMG Price Waterhouse Coopers(PwC) and Deloitte Touche. The AACSB only accredits those schools providing the Big 4 demanded curricula, eliminating from accreditation any school offering alternative small-business accounting education tracks to the exclusion of nearly ½ of American businesses. Educators themselves also bear great responsibility for their failure to address or inform students about small business providing so much to America. This circle is caused by the power wielded by the Big 4 firms over educators in the form of accreditation in college accounting programs, administered by the AACSB. This “Circle of Death” has led to a rapid demise of the very firms advising small business, the most critical part of the American business growth cycle. The burgeoning problem is exacerbated by educators leading students to work exclusively in Big 4 firms, educating their students exclusively in Big 4 curriculum and educators that were employed in a Big 4 oriented educate-train-work-educate cycle. Smaller firms cannot pay competitive salaries because the graduates must be expensively retrained in small business accounting needs. The lack of new entrants comes from two factors: first a nationwide decline in accounting students (none of whom get hired by small firms) and second because small firms charge too little for their services to be able to pay comparable salaries. This small business group of accountants is declining at an alarming rate because of aging, retirement and, primarily, lack of new entrants in the field. Thus, small firms provide indispensable advisory services to small businesses that account for nearly all new job creation and ½ of GDP. Similar to most small firms, my firm stopped auditing over 20 years ago and stopped performing reviews over 10 years ago because of this lack of client or creditor demand. The need for formal financial statements is rare because lenders realize the high cost of audited financials is not beneficial to either party, so usually a tax return or basic prepared or compiled financial statement is provided. Small business has unique needs for accounting services: primarily tax and advising, and secondarily day-to-day accounting needs to act as de-facto controllers and decision makers. These businesses have their financial advisory needs served by hundreds of thousands of small firm accountants and CPAs nationwide. Bob has given us permission to reprint in full and we are enthusiastically doing so in the hopes it will spark much-needed conversation about one of the profession’s most significant issues: the Big 4 oligopoly.Īccording to the SBA, small business generates about 44% of GDP in America and 2/3 of new jobs annually. note: the following is penned by Bob Jennings CPA, EA for his newsletter.
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