Deloitte Touche Tohmatsu Limited
Deloitte Touche Tohmatsu Limited, commonly known as Deloitte, is a prominent global professional services firm headquartered in London, United Kingdom. It serves as the umbrella organization for a vast network of member firms, which operate as separate legal entities across over 150 countries. These member firms provide a range of services including consulting, auditing, financial advisory, and tax services, tailored to local laws and customs. By 2022, Deloitte employed over 415,000 individuals and generated significant revenue, illustrating its expansive reach and impact in the business world.
Deloitte traces its origins back to the 1800s, developing through a series of mergers and acquisitions, and is recognized as one of the "Big Four" accounting firms alongside KPMG, PwC, and EY. The organization has specialized units addressing diverse industries such as consumer products, energy, financial services, and public health. However, Deloitte has not been without controversy, facing various scandals related to corporate ethics and audits, including significant fines for failures in auditing. Despite these challenges, Deloitte remains a key player in the global consulting landscape, advising some of the world’s largest corporations and public sector organizations.
Deloitte Touche Tohmatsu Limited
Company information
- Date founded: 1845
- Industry: Business services
- Corporate headquarters: London, United Kingdom
- Type: Private
Overview
Deloitte Touche Tohmatsu Limited is a privately held company headquartered in London, United Kingdom. Deloitte Touche Tohmatsu Limited is the guiding organization of the Deloitte organization, which is made of numerous member firms. Member firms offer business services such as consulting, auditing, financial advisory, and tax services. By 2022, Deloitte employed more than 415,000 employees.
Deloitte Touche Tohmatsu Limited does not offer services, and it acts to set standards and rules for firms in the organization to follow. The Deloitte brand is made of hundreds of member firms. These firms are individual legal entities that are located in the countries and regions where they offer services. These firms follow their local laws and customs, and different firms sometimes offer different services. As separate legal entities, these firms cannot bind Deloitte Touche Tohmatsu Limited in any legal deals. Making each firm its own entity allows the firms to follow specific local laws, and it allows firms to practice in places where international companies are prohibited from offering certain services (e.g., tax services). Each member firm is typically owned by Deloitte member firm partners.
Although the member firms are separate, they are expected to follow the rules and regulations created by Deloitte Touche Tohmatsu Limited. They are expected to maintain a culture that reflects that of the overall Deloitte brand. They are also expected to align their goals and values with those of the Deloitte brand. Deloitte Touche Tohmatsu Limited also shares methodologies and quality control systems with its member firms. Furthermore, member firms are expected to advise Deloitte Touche Tohmatsu Limited about any joint ventures, mergers, or any other types of legal arrangements with other firms.
The Deloitte organization offers various business services around the world. Member firms offer tax services, including tax services for specific regions and for particular business structures and tax compliance services. The organization also offers consulting services and has advised some of the world’s largest firms. It offers consulting services in fields such as business operations, marketing, technology and performance, human capital, and strategy. Firms also offer audit and assurance services, including auditing business accounting and auditing for events and transactions. The organization offers mergers and acquisition (M&A) services in more than 150 countries. They offer M&A consulting dealing with strategy, due diligence, divestitures, and more. They also offer risk and financial advice dealing with cyber risk, accounting, regulations and law, and transactions. The firms in the organization also offer accounting and legal services.
The Deloitte organization also has several units that offer specialized services. Deloitte Private offers services for private companies. This unit offers tax, consulting, and financial advisory services, but their services are tailored to serve the needs of private businesses. Deloitte AI Institute is a unit that offers consulting and advice on AI services, data, AI ethics, and innovation.
Although the Deloitte brand offers services to all types of businesses and organizations around the world, it specializes in offering services to specific industries. It specializes in the consumer industries, including automotive, consumer products, and hospitality. It works in the energy and resources industries, including in industrial production, mining, and oil and gas. It works in the financial services industry, including in banking, insurance, and investment management. It also specializes in working with government and public services, including in defense and security, health and human services, and infrastructure. Deloitte also specializes in industries including health care, technology, and media.
History
Deloitte Touche Tohmatsu Limited was formed from numerous mergers and acquisitions throughout its history, but the company can trace its origins back to the 1800s when numerous other accounting firms first began because of changes in the economy and business thanks to the Industrial Revolution. In the late 1800s, some members of the United States government wanted to increase efficiency in the government to save money and improve performance. The government hired accountants Charles Haskins and Elijah Watt Sells to investigate, and they used auditing practices to improve efficiency and save the government hundreds of thousands of dollars. After working together on the government audit, Haskins and Sells opened their own accounting firm in New York. The country had few accounting firms at the time, and the business quickly grew, opening offices in Chicago and London.
More changes in business and tax structure in the United States and in Great Britain led to a higher demand for accounting work. Scotsman George A. Touche opened his own accounting business in London in 1898. His business also grew, and he and his business partner John Ballantine Niven opened an office in the United States called Touche, Niven & Company two years later. Touche, Niven & Company operated in the same building as Haskins & Sells. The introduction of the income tax in the United States in the early 1900s also helped grow both businesses.
In 1947, an accountant named George Bailey launched his own firm in Detroit. Soon after, Bailey merged with Touche, Niven & Company to form Touche, Niven, Bailey & Smart. The firm soon added consulting services in the mid-1900s, giving it a new avenue for growth and revenue. In 1969, the organization was renamed Touche Ross. Throughout the mid-1900s, Haskins & Sells also grew and changed forms. It merged with twenty-six other firms. It also opened more offices in the United States and expanded its global reach by opening offices in Canada, Europe, and Asia.
In the 1970s, business in the United States and around the world became more globalized. It also became more ruthless in its quest for efficiency, and many companies removed middle management positions and streamlined their operations. Such changes allowed accounting and consulting firms to grow larger. By that time Deloitte Haskins Sells, as it had been renamed, and Touche Ross were two influential accounting and consulting firms around the world. In 1989, the two companies merged to form Deloitte & Touche.
In the 1990s and early 2000s, Deloitte & Touche created a specific consulting unit. It also began to reorganize itself by creating four subsidiaries—Deloitte & Touche LLP, Deloitte Consulting LLP, Deloitte Financial Advisory Services LLP, and Deloitte Tax LLP. In 2011, the company again changed its name to Deloitte Touche Tohmatsu Limited.
Impact
Deloitte is known as one of the big four accounting firms, along with KPMG, PricewaterhouseCoopers (PwC), and Ernst & Young (EY). These four accounting and consulting firms are known around the globe for their significant influence in large part because they work with some of the world’s largest corporations and have contracts with many world governments and non-profit organizations. As a member of the big four, Deloitte is an influential organization. Like the other members of the big four, Deloitte has also been known for numerous scandals.
For example, in the 2010s, news reports revealed that Deloitte had a corporate espionage team that spied on other companies. Some people claim that Deloitte used the information it obtained to guide its clients’ decision-making and to develop some of its own business strategies. For example, a news report claimed that members of the Deloitte espionage team—some of whom had worked for the US Central Intelligence Agency (CIA)—spied on BearingPoint, a struggling consulting firm. In 2007, BearingPoint’s executives were holding secretive meetings, and members of the Deloitte organization wanted to better understand what was happening at the firm.
Deloitte’s spies went into the BearingPoint building to try to learn about what was creating such urgency at BearingPoint. The spies stationed themselves in bathrooms and hallways, listening for clues. After BearingPoint’s management left the building, the spies found documents left behind that outlined BearingPoint’s dire financial situation. Deloitte eventually acquired the North American services unit of BearingPoint in 2009, though Deloitte claimed that it did not make the decision to acquire the unit based on the information it obtained through corporate espionage.
The company also faced other scandals. For example, Deloitte employees in the United States protested the organization’s contracts with the US Immigration and Customs Enforcement (ICE) in 2018. At the time, the ICE and the US government were committing harsh practices at the US border by separating incoming migrant families, including separating children from their parents. Some employees in the United States created petitions calling for Deloitte to end its consulting work for ICE. At the same time, employees from McKinsey & Company also protested, and McKinsey severed ties with ICE. However, Deloitte continued its work for the organization and even signed new contracts worth millions of dollars with the ICE the next year.
In 2020, the Deloitte organization faced repercussions for work it completed in the United Kingdom. The UK’s audit regulator, the Financial Reporting Council, fined Deloitte roughly 15 million pounds (approximately $19 million) for failing to act with “competence and due care” when auditing the software company Autonomy Corp., which eventually failed. Just a few years earlier, Deloitte also faced fines for its auditing of the building company Carillion Plc., which also failed. In 2022, the company brought in $59.3 billion in revenue, nearly a 20 percent increase from the previous year.
Bibliography
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Forsythe, Michael, and Walt Bogdanich. “Employees Call on Deloitte to Stop Working with ICE.” The New York Times, 12 July 2018, www.nytimes.com/2018/07/12/business/deloitte-ice-contract-uproar.html. Accessed 26 Mar. 2022.
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Sebag, Gaspard. “Deloitte Fined Record $19 Million over Autonomy Audit Scandal.” Bloomberg Tax, 17 Sept. 2020, news.bloombergtax.com/daily-tax-report/deloitte-fined-record-19-million-over-autonomy-audit-scandal. Accessed 26 Mar. 2022.