All eyes in the accountancy world have been on how the Big Four are surviving
the current economic downturn. Corporate finance work in particular has been
expected to fall off a cliff, and with the best will in the world, this missing
fee income will not be replaced completely by corporate recovery work.
see the Top 30 as a pdf click here
But so far, income is holding up among the four largest accountancy networks.
PricewaterhouseCoopers, the world’s largest accountancy group, reported a 14%
increase in worldwide fee income for the year to 30 June 2008. This growth has
secured its position at the top of Accountancy Age’s international
accountancy survey with $28.2bn (£16.4bn) in global income. Half of that income
came from Europe, the Middle East and Africa, while just over one-third (36%)
was earned in the Americas. The remaining 14% came from its firms based in Asia
and the Pacific rim.
Sam DiPiazza, PwC International’s chief executive, says: ‘Despite the
challenges posed by the continuing credit crunch, particularly in developed
markets, PwC’s results held up well and all of our lines of business and firms
continue to grow.’
But its percentages are changing audit and assurance for the first time
accounted for less than one-half (49%) of the total, showing the gradual creep
away from the bedrock of the accountancy profession’s work.
PwC explains this by saying that the 3% growth in its assurance business
reflected the ‘difficult market conditions, a slowdown from the extremely high
growth in this area in previous years, changing regulatory requirements and the
very competitive nature of the assurance market’.
Ah yes, the competition. Although PwC would deny this, it must be looking
over its shoulder at Deloitte Touche Tohmatsu. With a growth rate of nearly 19%
this year, Deloitte is snapping at PwC’s heels, revelling in a global fee income
of around $27.4bn.
When announcing the results, Deloitte global chief Jim Quigley said: ‘Our
people’s continued focus on excellence and their demonstrated ability to work
together across geographies to meet our clients’ needs are fundamental to our
success. Our results show that our client-centric business model built upon a
global culture of consultation and collaboration, and delivery through strong
member firms with global connections, is a winning strategy.’
This may sound like a statement of the obvious, but it is a strategy that is
paying off. While others might be focused internally on how they organise
themselves, Deloitte is just getting on with it.
PwC recently announced how it would be creating three regional ‘clusters’ and
Ernst & Young third in the survey has made much of its decision to bring
its firms in Europe, Africa, the Middle East and India much closer together.
Although there will be no profit sharing per se, the firm will seek to spread
costs and ensure common processes and quality throughout its individual firms.
Such thinking helped the global organisation produce a 16% increase in fees up
to 30 June 2008.
Jim Turley, the firm’s larger-than-life chief executive, makes much of the
firm’s decision to more fully integrate its regional groups. ‘Today’s borderless
business environment demands a truly global approach from our organisation and
this is made even more important given the unprecedented turmoil we are seeing
in financial markets around the world,’ Turley says.
Then there is KPMG, which has yet to produce its results for this year due
some time in either December or January. Last year it reported a 17% increase,
bringing its largely pre-credit crunch income to $19.8bn.
Observers will be watching keenly, as its results will provide a clearer
snapshot of how the UK’s largest firms are coping with the financial turmoil. In
particular, it will be interesting to see how its new European partnership,
which has so far brought the UK, German, Swiss and Spanish practices into a
single firm, is faring.
To a degree, all the firms believe they have insulated their global
businesses by tapping into the growth of the emerging markets. But as the Asian
region makes up, on average, only 13% of their total income and, as the region
itself begins to slow, the next year could prove very interesting for the four
The next rung
It has also been an interesting year for BDO International, and new chairman
Jeremy Newman, will have some pressing issues in his in-tray. The global
organisation declared $4.7bn in worldwide income this year, placing it fifth in
Newman has long been a vociferous voice for opening up the profession to
greater competition, but inheriting a group that is less than one-quarter of the
size of the big boys shows he has some way to go.
But perhaps more pressing in the immediate future will be the ongoing legal
row in the US over BDO Seidman. The US firm has been fighting a long running
battle in the courts over its audit of Banco Espirito Santo and the
international organisation is now doing its level best not to be dragged into
the argument, and consequent liability (see page 18).
Grant Thornton International could usually expect to be placed next in the
survey, but it has yet to declare its 2008 income.
This explains the appearance of RSM International at number six in the
rankings. Earning $3.6bn as of 31 August 2008, it saw an 18% increase in fees
this year. But it has been a tricky time for the organisation, which saw the
loss of one of its key firms, Robson Rhodes, in the UK last year. The firm’s
place at the table was snapped up by Bentley Jennison, the ambitious
Finally, mention should be made of a new name in the top ten. Praxity, the
new alliance formed by Moores Rowland International and Mazars, pulled in $2.8bn
this year. Other organisations will undoubtedly be looking at this move as a way
forwarded, so there is a good chance we will see more groups coming together in
the coming months.