The New Era - Emergence of the Non-Big Four

Reputation and brand image have traditionally been the prime influences of buyer decisions, favoring the Big Four and preventing the entry of non-Big Four firms into the Fortune 500 segment. According to most Fortune 500 companies, the Big Four are better equipped to provide two key components of the audit service: value-added services, and insurance against catastrophes and reputation risk. The Big Four are also perceived to have greater capacity and international coverage to deliver the third key component, the technical audit itself. However, since the recession in 2008, reputation has ceased to be the only determinant while selecting accounting firms. The new audit buyer is not brand conscious, has low tolerance to negative audit opinions but is highly cost conscious. In the light of a dramatically changing economic environment, this paper examines the changing preferences of Fortune 500 companies on the procurement of audit, advisory, and tax services. This paper analyses the performance (financial performance & gains) of non-Big Four firms over the last three years. The study also exposes reasons for changing buyer preferences and aims to substantiate the trend with the aid of case studies.