MID-SIZED accountancy firms are catching up with the Big Four in the race to diversify away from audit work, says MGI Worldwide, the Top 20 international accounting network.
According to MGI Worldwide, the percentage of the mid-tier UK accountancy firms’ income from non-audit work rose to 55% in 2015 from 50% in 2014, and just 48% in 2013.
Audit work is seen by many accountancy firms as having lower profit margins, slower growth rates and higher legal risks than areas such as management consultancy or tax advisory.
Medium sized international accountancy networks are also succeeding in their push to diversify, with 46% of income form medium sized accountancy networks coming from non-audit work, like consultancy, insolvency and tax advice, in 2015.
The network said the enhanced ability to undertake cross border work is one of the reasons why many mid-sized firms are closing the gap on the Big Four, whose income from non-audit work was 61% of their total fee income.
An increasing number of medium sized accountancy firms are also beginning to earn significant revenues from service lines that were practically non-existent a decade ago like as cyber security, data analytics and regulatory advice.
Clive Bennett, CEO of MGI Worldwide said: “The growth of international networks has allowed SME accountancy firms to compete for international tax and consultancy work. Closer cooperation of member firms of international networks also allows them to transfer knowledge and expertise on non-audit work allowing them to grow those faster than if they were not able to share best practice.”
“Mid-sized firms are increasingly competing with the Big Four within some of these specialist non-audit areas.”