This text discusses the role of accountants, specifically the big four firms (Deloitte, PricewaterhouseCoopers, Ernst & Young, and KPMG), in the financial crisis and the subsequent economic stagnation. It highlights the failure of the accountants to hold capitalism to account and their focus on commercial priorities rather than ensuring good accounting practices. The text also explores the dominance of the big four firms in the auditing market and their ability to avoid serious consequences for their failures. It raises concerns about their influence in setting accounting rules, their involvement in government advisory roles, and their expansion into consulting services. Ultimately, the text argues for drastic reform in the accounting industry to prevent future financial crises.
| Signal | Change | 10y horizon | Driving force |
|---|---|---|---|
| Financial crisis leads to economic stagnation | Economic stagnation to uncertain economic future | Economic recovery and stabilization | Desire for economic stability and growth |
| Accountancy firms open exclusive clubs for clients | Exclusive clubs become more common | More exclusive clubs for wealthy clients | Desire for networking and prestige |
| Accountants fail to hold capitalism accountable | Lack of accountability to increased regulation and oversight | Increased regulation and oversight of accountants | Desire for more responsible financial practices |
| Auditing limited companies becomes critical | Inadequate auditing to more thorough auditing practices | Stricter auditing practices | Desire for accurate financial reporting |
| Accountants prioritize commercial interests | Commercial interests to increased accountability | Greater focus on ethical accounting practices | Desire for ethical and responsible financial practices |
| Big four accounting firms dominate market | Dominance to increased competition | More competition in the accounting industry | Desire for greater choice and diversity in accounting services |
| Accounting firms influence government policies | Influence to increased scrutiny and transparency | More transparency in government-accounting relationships | Desire for separation of public and private interests |
| Accountants face minimal public scrutiny | Minimal scrutiny to increased public awareness | Greater public awareness of accounting practices | Desire for accountability and responsible accounting practices |
| Accountants enjoy high incomes and little risk | High incomes and little risk to increased scrutiny | Greater scrutiny of accounting incomes and practices | Desire for fairness and accountability in income distribution |
| Accounting firms expand rapidly | Rapid expansion to more sustainable growth | More sustainable growth in accounting industry | Desire for stability and responsible growth in accounting services |
| Accountants prioritize consulting services | Consulting services to increased focus on core accounting services | Greater focus on auditing and financial reporting | Desire for accurate and reliable accounting practices |