Euro will hit fees
Big firms expect lower audit earnings as euro gives rise to finance consolidation.
Leading firms have admitted that they expect to lose audit revenue as a result of moves by businesses to consolidate their finance functions in the wake of the launch of the euro.
PricewaterhouseCoopers business processing outsourcing global leader John Barnsley said last week that his firm would earn less from its auditing service as technology, global economic factors and the introduction of the euro shaped business priorities.
Speaking at the launch of PwC’s first European Economic Outlook in Brussels last week, Barnsley said: ‘Companies have looked more closely at their non-core function needs which require full-time staff and have questioned whether they need to own these resources, such as accounting and finance, human resources and non-core procurement.’
Barnsley added that over-supply in several sectors and the desire to introduce standardisation across businesses would also mean that the pace of mergers and acquisitions would speed up. According to PwC’s own research, around 70 per cent of basic business processes are common to all organisations.
‘Nobody yet knows what the true effects will be and there will still be a need for these companies to audit their transactions,’ he said.
‘But it will simply take place in fewer centres. We will get less money from this but we could get more from outsourcing.’
Ian Scotter, director of Deloitte & Touche outsourcing arm SCL business development, agreed that there would be risks to the big firms as a result of moves by global companies to restructure their finance functions. Businesses as big as BMW have already said they will centralise their finance functions in the wake of a single European currency.
But Scotter said: ‘I think that the opportunities for people in accountancy are equal to the risks. If they embrace the chances that outsourcing gives them with vigour, then I do not think they have anything to worry about.’
SCL would be well placed to help companies consolidate and was looking forward to a growth in fees from this side of the business, he added.