Sister publication International Accounting Bulletin has published its annual world survey ranking networks and associations by fee income and staff numbers globally and regionally. Vincent Huck comments on the results
Deloitte returns to the top of the ranking table while the smaller global accountancy groupings are getting smaller and the bigger ones bigger, according to sister publication International Accounting Bulletin’s latest world survey released this week.
Deloitte overtook PwC at the top of the table by a margin of US$904m, with fee income of US$36.8bn in the year to 31st May 2016. PwC reported US$35.9bn in the year to 30th June 2016, losing the top spot it had snatched in the previous year.
Ranked fourth, KPMG, who had fallen behind the other Big Four in the last two years, seems to be back on the growth path, reporting a 4% increase in fee income, rising to $25.4bn.
To turn around its fortunes, KPMG has been increasingly and aggressively targeting the middle market. A strategy not unique to KPMG but followed by all the Big Four. As a consequence, they have seen their combined market share increase (66.6%) while the top six mid-tier networks have seen their combined market share decrease, according to International Accounting Bulletin’s data.
In the associations’ rankings, nearly all the participants in the lower half of the table reported a decrease in fee income, pointing to struggling times ahead for the smaller players whose resilience might be at risk without critical mass and a truly global presence.
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By GlobalDataSpeaking at a roundtable in London, held under the Chatham House Rule, on the results of International Accounting Bulletin’s latest world survey, CEOs and COOs of networks and associations, said the smaller players will find it harder to survive in the coming year and they expect further consolidation in the accountancy market both for networks and associations.
Looking ahead, CEOs and COOs said that technology and recruitment will be top of their agenda. As advances in technology transform the accountancy profession through greater automation, accountants’ role is becoming less one of a compliance officer and more of a strategic adviser. Therefore today’s investments in technology are key to the long-term success of accounting firms.
The evolving role of accountants also means that firms now need to recruit staff from a wider range of profiles and skills. Beyond trainee accountants; firms are looking at engineers, IT specialist and others.
The war on talent is fierce amongst firms, not only because they have to compete between themselves, but because they are also competing with other sectors. The challenge is exacerbated by the younger generation’s approach to work, as one of the roundtable participants put it: “If you think of the Big Four, for example, and Google, to take another example, where out of the two would a millennial prefer to work?”
Roundtable participants also voiced their concerns with regard to the macroeconomic environment. They said unanimously that the result of the UK’s referendum on EU membership, as well as the USA’s presidential election, political turmoil in Latin America and the tax scandals following massive leaks such as the Panama Papers, have further increased uncertainty and volatility in the market for 2017.
With key elections in France and Germany in the coming year, they expect uncertainty and volatility to continue to be the norm.
All world survey data and analysis can be found on the website of our sister publication, International Accounting Bulletin
