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The business of auditing

Published on March 31, 2026   8 min

A selection of talks on Finance, Accounting & Economics

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0:00
Hello. This is David Hay, Professor of auditing at the University of Auckland, New Zealand. This is the first of 10 talks on the principles of auditing. In this first talk, we're going to give you some background information about auditing, the business of auditing, and the way people perceive auditing.
0:16
Think about the firms that provide auditing services. Some of them are quite well-known and prominent. But they're also rather strange. Strange because they're not corporations as we usually see them, and strange because they're not the multinational organizations that they might seem to be, and they're also widely misunderstood. They prepare their reports in a very standard format, nevertheless. But there is something called the audit expectation gap, where people widely misunderstand what auditors are doing. That gap is about the difference between what auditors think they're doing and what the users of the financial reports believe that auditors are doing. It's quite a wide gap, and it has quite major effects. So I'll introduce those topics today.
0:58
The four major audit firms Deloitte, EY, KPMG, and PwC are very well known. They don't publish full sets of accounts like a corporation would, but they do publish some information. Most of these firms produce a global transparency report of some kind which tells us a bit about their revenue, their activities, and their people. From those, we can see, for instance, that Deloitte Global has a revenue of $67.2 billion, of which auditing is only $12.8 billion. Auditing is about a fifth of their business. Not long ago, the firms were mainly involved in auditing activity. But recently their consulting activities have grown enormously. That's an important thing about understanding them. Another one of the firms, PwC, reports $55.4 billion of revenue. When it talks about its staff, it says there are 370000 professionals, as they call them, working for the firm in about 149 different countries. The big four firms all have similar organizations with large turnover, similar very large organizations and lots of people.

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The business of auditing

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