Review Questions: 1-20
Public accounting firms are sometimes grouped into categories of local firms, regional firms, and international firms. Explain briefly the characteristics of each. Include in your answer the types of services stressed in each group.
To begin, each public accounting firm has different characteristics and offer different services for each branch of service. First, the local accounting firms only have one or two offices which consist of only one CPA or a few CPAs as partners or the serving of clients in a single city or surrounding area. These firms do not offer much but do emphasize on income statements, consulting of clients, and accounting services. Auditing is only a small portion of the company and sometimes involves the concerns of other small businesses. Secondly, the regional public accounting firms are formed together by local firms, which allow them to open offices in different neighboring states and cities to increase the number of professional staff members. The growth of the merging of other local firms to form regional accounting firms is due to an increase in the amount of auditing services. Third, the national public accounting firms are the firms that have offices throughout some of the major cities in the U.S. National accounting firms can operate on an international level with their own offices or through affiliations with firms of other countries. Finally, the international public accounting firm stated in the new until the year of 1989. These firms went from 8 to the big four due to the merging and dissolution of (Arthur) Andersen LLP. In addition, they audit majority of all the largest American corporations. In despite of all the financial services offered; auditing represents a whole, if not all, share of the work. After the merging of all the firms, they are now called the Big 4 Firms which are made up of Deloitte & Touche LLP, Ernst & Young LLP, KPMG LLP, and PricewaterhouseCoopers LLP.
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