Question

Founding fathers and international mergers of Big Four audit firms.

In 1990 Deloitte Touche Tohmatsu was created following a number of earlier mergers. In 2003 the names of Touche and Tohmatsu were dropped, leaving Deloitte as the firm’s full name. Deloitte was established by three founders: William Welch Deloitte, George Touche and Admiral Nobuzo Tohmatsu.

In 1845, at the age of 25, W.W. Deloitte opened his own office opposite the Bankruptcy Court in Basinghall Street, London. At that time three Companies Acts created joint-stock companies, laying the foundation for modern company structures. Deloitte made his name with the industry of the day – the railways – and in 1849 the Great Western Railway appointed Deloitte the first independent auditor in that industry. He discovered frauds on the Great North Railway, invented a system for railway accounts that protected investors from mismanagement of funds, and was to become the grand old man of the profession. As president of the newly created Institute of Chartered Accountants, Deloitte found a site for its headquarters in 1888. In 1893 he opened offices in the USA.

Financial disasters in the new and booming investment trust business in the England gave George Touche his business opportunity. His reputation for flair, integrity, and expertise brought him a huge amount of work setting these trusts on the straight and narrow. A similar flair for saving doomed businesses from disaster and restructuring them led to the formation of George A. Touche & Co. in 1899. In 1900, along with John Niven, the son of his original Edinburgh accounting mentor, Touche set up the firm of Touche, Niven & Co. in New York. Offices spread across the USA and Canada and were soon attracting clients like R.H. Macy, a large US nationwide department store. In the UK, General Electric Company was an important client and still is. Meanwhile Touche himself took his reputation for probity and ran for public election in England and became MP for North Islington, England in 1910, and was knighted in 1917. He died in 1935.

After Tohmatsu qualified as a certified public accountant at the age of 57 in 1952, he became a partner in a foreign-affiliated accounting firm and a director of a private corporation. In 1967, he became president of the Japanese Institute of Certified Public Accountants. In the 1960s, the Japanese government wanted to see national audit corporations established, and Tohmatsu asked Iwao Tomita, a former student and a graduate of the Wharton School in Chicago, to respond to that challenge. In May of 1968, Tohmatsu & Co. (formerly Tohmatsu Awoki & Co.) was incorporated.

Question: What events and circumstances contributed to the growth and international scope of Deloitte’s operations?

Answer 1

The growth and international scope of Deloitte’s operations found its foundation and stepping stones in the modern company structures that came into existence in the mid-1800s. During this period joint stock companies came into existence and this paved the way for the growth of operations for Deloitte. The three founders Mr. Deloitte, Mr. Touche and Mr. Tohmatsu found their breaks during the same time more or less. Mr. Deloitte found break with auditing of railways in USA, Mr. Touche found break with the growing investment trust business in England and Mr. Touche found his break with the proliferation of businesses and industries in Japan.

These events and circumstances paved the stepping stone and set the tone for international growth and expansion of Deloitte’s operations. As such we can say that Deloitte’s operations benefitted from the growth of commerce and industries during the period in which it set out in the market and the company’s founders took advantage of this favorable situation to globally expand the operations of the company and make it a big name in the field of auditing and consulting.