Tectonic Shift in the Accounting Landscape: Deloitte Catching Up with PwC
A survey released by the International Accounting Bulletin (IAB) has revealed several improvements in the performance of accounting firms globally since 2009, including the notable performance of Deloitte that increasingly catches up with PricewaterhouseCoopers.
The IAB World Survey 2011 was drawn from the financial results and staff data of 35 to 40 key accounting organizations worldwide and was launched on January 27.
The survey found that only four networks have failed to grow revenue compared with last year’s result. Revenue growth for networks increased 2 percent, however the revenue growth of associations declined 2 percent.
“Recruitment has remained stable and is expected to improve slightly from 2010. There has also been a shift in the Big Four, with Deloitte narrowly superseding PwC for the first time with just $9 million separating the two. PKF s the fastest growing network in the top ten and BDO has held its position as the leading mid-tier firm with a strong 5 percent growth,” said Arvind Hickman in a statement, Editor of IAB.
IAB found that Deloitte has generated $9 million more global revenue than PricewaterhouseCoopers did. But it pointed that PwC is still the largest global audit firm and has the largest tax business.
In addition, Deloitte’s consulting services have grown 12 percent, including large acquisitions in the US and UK such as the Bearing Point and Driver’s Jonas, respectively.
On the other hand, BDO has become the largest mid-tier network growing 5 percent, while PKF International has made it to the fastest growing network among the ten accounting firms closely looked into by the survey. IAB noted that PKF’s improvement could be attributed to its additions in USA. Among the independent firms, Praxity is the largest association with $3.3 million in revenue.
Chinese firms have grown 20 percent, India by 14 percent, and Brazil by 11 percent due to investments by networks in these emerging economies, IAB said.
“However the US, Russia and Australia have had the most challenging trading conditions, evidenced by widespread contractions in revenue,” Hickman said.
IAB’s survey has also tackled the recent controversies in the accounting industry, particularly the lawsuit filed by New York AG Andrew Cuomo against Ernst & Young over the collapse of Lehman Brothers. IAB found out that despite these issues, litigation has been much quieter for firms last year.
At present, one of the issues being widely debated upon is the EC Green Paper on audit reform and the expected US adoption of IFRS. Further, fee pressure continues to grow widespread, hitting the audit sector hardest. But audit revenues have increased for most networks, with PwC taking the lead and Deloitte following, IAB noted.
The strong demand in transfer pricing work and international tax advice has fueled the strong performance of tax, IAB continued, saying PwC has been the major player in this sector.
In the sustainability services market, the mid-tier are starting to make more noise. However, support for IPO services and transaction in corporate finance remains flat, the IAB added.