September 2014 Issue 541 www.InternationalAccountingBulletin.com
Profession’s elite
IAB Annual Award winners
●●UK CMA and EC take hard line on new rotation rules ●●Profession in France resilient in tough economy ●●Latin America’s modern day gold rush ●●Unsettled times for Dutch profession
International Accounting Bulletin editor’s letter
CONTENTS
News 02-03 Thanks for a great event ■■ PwC UK revenue up 5% to £2.8bn. ■■ Deloitte UK growth slows as audit revenues fall. ■■ UK CMA and EC take hard line on It’s September and another successful and all who attended the event and awards. new rotation rules International Accounting Bulletin event is If you were unable to attend the session behind us. there will be an article summarising the IAB Awards 04-08 This year our headline sponsor Aon, as M&A and cyber discussion in the October well as Intuit QuickBooks, CaseWare, Star issue of IAB. o4-08: And the winner is... Computers and Xero, enabled us to enhance In this month’s issue you can capture the This month International Accounting the annual awards evening and develop it spirit of the evening from the pictures and Bulletin hosted its annual global industry awards celebrating worldwide best into a half-day conference discussing some awards coverage. While the Forum was a practice in the accounting profession. of the key challenges facing the profession. first for IAB, this year’s Awards were our The awards ceremony was part of a half- The inaugural IAB Forum, which took third and we received over 100 nominations day inaugural IAB accountancy forum in London and joined industry leaders and place on 16 September in London, was the with the judges remarking on a really high old friends from around the world. first such event in the more recent history of quality of submissions this year. The big IAB and the response from the profession winner of the evening was KPMG, which Country Surveys 09-20 was excellent with many of you compli- was handed the Audit Innovation of the menting us on the agenda and the high- Year Award, Social Media Champion of o9-12: France quality speakers discussing recent M&A the Year Award and Sustainable Firm of the After another year of economic inertia in France, opinion is divided on whether trends and their effects on the industry, and Year Award. Other winners included RSM, anticipated modest growth in 2014 the issue of cyber security for accounting Praxity, Grant Thornton International and and 2015 will translate into increased firms. many more. professional activity. Paul Golden reports. I would like to take this opportunity to The winners also included IAASB chair- 13-19: Latin America thank Aon Global Professions managing man Professor Arnold Shilder who won the positive economic indicators, SMEs going director Keith Tracey for helping our team Lifetime Achievement Award, IIRC’s Paul international, and accelerated regional economic integration are sources of prepare and secure some of the speakers. Druckman for Personality of the Year and optimism for accounting firms in Latin I would also like to thank all the speakers Kader Kaneye from Niger who won the America, as Vincent Huck reports. which includes Linklaters partner William Young Accountant of the Year Award. 20-24: Netherlands Buckley, global CEO for BDO’s EMEA I would like to take this opportunity to Despite high-profile developments region Anders Heede, Grant Thornton encourage you all to nominate again next on audit reform, the shakeout of the International general counsel Dan Lichten- year and battle the competition once more Dutch accounting profession is far from complete. Paul Golden reports. stein and Wragge Lawrence Graham & Co with hopefully some more new contenders partner Jane Howard, who all spoke in the to emerge. M&A session. As well as UK Government We hope that all the positive event feed- BIS assistant director Orla MacRae, PwC back is a good sign for future IAB awards security director Jonathan Burdett, Open- and that we’re able to build on our recent Sky practice director – cyber security, risk achievements and, as always, we’re always Editorial Advisory Board and compliance Nigel Stanley and Intuit keen to hear your views and feedback. Kevin McGrath, Crowe Horwath International CEO QuickBooks head of business development Congratulations again to all our winners Kevin Arnold, Nexia International CEO Nick Williams, who were our panellists in and shortlisted networks and associations. Geoff Barnes, Baker Tilly International president and CEO the cyber session. Graeme Gordon, Praxity executive director I would also like to thank all 17 senior Ana Gyorkos Stephen Jacobs, INPACT International president executives who attended the round table [email protected] Jon Lisby, Kreston International executive director James Mendelssohn, MSI Global Alliance, chairman Christian Mouillon, E&Y global vice- chair, assurance Ed Nusbaum, Grant Thornton International CEO Michael Reiss von Filski, Geneva Group International CEO Liza Robbins, Morison International CEO Martin van Roekel, BDO International CEO Jean Stephens, RSM International CEO Robert Tautges, HLB International CEO Pauline Wallace, PwC head of public policy and regulatory affairs
www.InternationalAccountingBulletin.com September 2014 y 1 news round-up International Accounting Bulletin
IAB Online – september news round-up
Top 5 articles UK The firm hired 2,700 people and in 2013. Female partner appointments PwC UK revenue up 5% the average distributable profit Profit distributable to partners remain low as KPMG UK adds 52 PwC UK has reported an increase per partner was £722,000, up for 2014 fell from £571m in 2013 partners of £125m in its fee income to 2% from £711,000 in 2013. The to £554m at the end of May, with £2,814m ($4,576m) in the year to firm’s results also include the PwC the average profit earned by EY and the Parthenon Group 30 June 2014. network Middle East practice. partners also decreasing in 2014 complete merger The 5% increase in fee income to £750,000 from £772,000 the UK previous fiscal year. G20 fail to stop global warming: “reflects an improving economy, the Deloitte UK growth slows as Overall, employment figures PwC growing confidence of our clients and the ongoing investment we audit revenues fall increased from 3,000 to 3,500, Deloitte UK growth slows as audit have made in the firm over the past Deloitte UK has seen its growth with 72 new partners and 1,500 revenues fall six years to create a responsible, slow to 1.4%, as revenue increased new entry-level positions added. profitable and well diversified to £2.55bn ($4.23bn) for the year Deloitte UK chief executive Grant Thornton continues its business,” according to PwC UK ending 31 May 2014, compared to and senior partner David Sproul external growth strategy chairman and senior partner Ian £2.52bn last year. attributed the slowdown in growth Most retweeted article Powell. The growth figure marks the to “uncertainty” in the market PwC UK saw an increase in fee lowest level in four years and a and added that despite a “year of Grant Thornton continues its income across all its service lines sharp fall compared to the 8% investment” for the firm, doubt external growth strategy with assurance up 6% to £1,025m, revenue increase witnessed in continued to dampen prospects for tax 5% to £714m, deals business 2013 and 11% growth in 2012, the coming months. Read in 170 countries up 3% to £580m and consulting by which was mainly on the back of “Looking ahead, we expect that UK 28% 4% to £495m. strategic investments. better economic conditions will US 10% With assurance services, Among the firm’s service lines, result in significant improvements Mexico 9% including audit, contributing audit fell 1.8%, from £719m in across our markets. Growth has Malaysia 6% to just over £1bn of the overall 2013 to £706m. The decrease increased in the first quarter of India 5% revenue the firm said 63% of comes after last year’s 12% the new financial year and we are Singapore 3% its revenue was generated from increase in fee income in audit. seeing a renewed confidence and Rest of the world 39% clients it does not audit. The decrease in audit is likely optimism in our clients to make Due to retendering rules and down to pending mandatory audit investment decisions. The global pending implementation of the firm rotation and many FTSE ambition of our clients and our European audit reform, the UK 350 already retendering their people is creating opportunities market has seen many FTSE 350 audit contracts. Last week PwC for the firm to increase revenue companies retender their audit forecasted 56 of the FTSE 350 are internationally,” he said. contract. In the past year PwC has to put their audit out to tender “However, while we continue to won audit tenders such as HSBC, this year. make investments for the future, Vodafone and British Land. For Deloitte UK tax revenues we do hold a concern that political PwC has retained its position as remained flat at £562m, compared uncertainty may dampen business the largest professional services to £563m last year. activity later in the year.” firm in the UK, with its close Consulting increased slightly Deloitte UK results also include Join our online community competitor Deloitte UK reporting (0.5%) from £619m last year to the network’s Swiss practice, revenues of just over £2.5bn in the £622m, while corporate finance which contributed £236m to the year to 31 May 2014, an increase bucked the trend with a 4.7% firm, a 13% increase on last year’s LinkedIn Group of 1.4%. increase to £424m from £405m figure of £209m. World Accounting Intelligence Movers & shakers Twitter WAI_News EY UK has appointed Jason Lester managing partner and a member Santa Fe Associates International as head of tax in the UK and of the audit management team at (SFAI) has reappointed Alfredo Facebook page Ireland. Baker Tilly since 2011. He joined Spilzinger as chairman of the World Accounting Intelligence Lester has a 20-year career with Baker Tilly in 1996 before becoming network’s executive board for EY. Prior to his appointment, he a partner in 2000. another four-year term. served as tax markets leader for The network has also appointed Scan our QR code for quick the UK and Ireland and also led AGN Europe has appointed former KPMG partner Pablo smartphone access to IAB EY’s business tax services team. Marlijn Lawson as regional Fudim as chief technical officer director for Europe. After joining and former Grant Thornton Baker Tilly, based in the UK, which AGN Europe as international International partner Claudio joined RSM International earlier executive assistant in 2008, Rodriguez as chief compliance this year, has appointed Jonathan Lawson was appointed director officer. Ericson as the firm’s new head of of membership and event SFAI is a network of independent audit. management for the association member firms headquartered in Ericson has been a regional audit in early 2013. Santa Fe, New Mexico in the US.
2 y September 2014 www.InternationalAccountingBulletin.com International Accounting Bulletin Analysis news
Uk UK CMA and EC take hard line on new rotation rules
UK FTSE 350 companies which have like the two regimes will overlap neatly.” the second interpretation. recently retendered or changed their auditor However the profession is concerned over “We don’t believe this interpretation is the in the UK are most likely going to have to the transition periods adopted. In its draft right one,” Lord said. “And it’s the most do so again as early as 2016 under the new order the CMA aligned with the provisions fundamental point we are making in our audit rules introduced in the UK and the EU. of the EU regulation which divides compa- response to the CMA.” In its draft order on statutory audit ser- nies in three categories, as of 17 June 2014 ICAEW head of integrity and markets vices for large companies, the UK’s Com- (the date the regulation was issued): com- Tony Bromell said the profession had hoped petition & Market Authority (CMA )ruled panies which had an auditor for 20 years the rule would not be interpreted in this that businesses which had recently appoint- or more will have six years to comply with way. “But it’s the one the CMA adopted and ed their auditors will not benefit from the the new rules; and companies which had it’s the one the European Commission has transition period and under these rules the same auditor for between 11 and 20 also adopted,” he said referring to an open would be the first to put their audit out for years will benefit from a nine-year transi- letter by EC internal market and services tender again, some as early as June 2016. tion period. director general Jonathan Faull which aims The CMA’s stand was later supported But for the third category: companies to clarify the EU rules. by the European Commission (EC) which which had the same auditor for less than 11 In his letter Faull clearly states that PIEs published a letter in early September stating years, the EU provision could be interpreted which appointed their auditors on or after that the EU regulation was to be interpreted in different ways. 16 June 2003 “will need to change their in the same way by other EU member states. “One way to read it was to say that these given audit firm or statutory auditors by The profession had expressed its concern companies would benefit from a 12-year 16 June 2016”. on the matter while answering the public transition period, which is quite logical,” Lord highlighted that this letter was pub- consultation launched in July this year by Lord said. “Another way of reading the lished nearly two months after the CMA the CMA on its draft order which aimed rule is to say that these companies would be launched its consultation and a few weeks to align the EU audit regulation with the moved straight on in the new regime with- after accounting firms and professional findings of the UK Competition Commis- out transition.” bodies had sent their replies. sion investigation. Businesses which had appointed an audi- “That letter is not legally bidding,” she PwC UK partner Gilly Lord said: “As the tor in 2005 would then have to put their added. “But having said that I suspect CMA is saying we want 10 years tendering audits out to tender as soon as June 2016 it will be very influential when the CMA and the EU says you must rotate after 20 (the date at which the regulation will be decides if it wants to make any changes to years if you tender after 10 years, it looks enforced). In its draft order the CMA chose the order.” < FirmMovements
Chicago-based Baker Tilly Virchow Mauritian firm Global Wealth Auren will integrate Colombian firm & Associates to its network. Krause and ParenteBeard in Management Solutions (GWMS) to its TH&R Consultores y Auditores within Through the merger, Baker Tilly Philadelphia, both members of Baker association. its international network, effective Malaysia expands to eight offices Tilly International, have merged GWMS is headquartered in the from 13 October. in the country. Chang & Associates to become Baker Tilly Virchow The network already has a presence island’s second-largest city Beau- will rebrand to Baker Tilly CKF as a Krause, effective from 1 October. The in the country through Antea, an Bassin Rose-Hill. The firm has 19 consequence. resulting firm will have more than staff managed by three directors and international association of which it 2,500 employees across 29 US cities is a founding member. provides financial services including Geneva Group International has and earn annual revenue of $475m, accounting and tax. added Japanese firms Tokyo according to the network. Baker Tilly EY and The Parthenon Group have finalised their merger announced Consulting Group and Kyowa International is counting on the new Baker Tilly International has in July. Accounting Group to its network. firm to strengthen its presence in the added accountancy firm Bardon Parthenon Group’s 300 Tokyo Consulting Group, established US’s northeast corridor between the Molumby, based in Portlaoise, professionals in offices in Boston, in 1998, employs over 300 staff, financial and political centres of New Ireland, through merger with its London, Mumbai, San Francisco, York and Washington DC. Irish member firm Baker Tilly Ryan including four managing partners, Shanghai and Singapore and EY’s Glennon. located in the Tokyo headquarters MSI Global Alliance has expanded investment strategy practices The merged firm will trade and branches in Yokohama, Nagoya, its association to Azerbaijan by will operate under the Parthenon- and Osaka. The firm provides appointing E&S Accounting and as Baker Tilly Ryan Glennon and EY brand as part of EY’s global accounting, tax, advisory, and Consulting as a member firm. employ over 150 professionals transaction advisory services. across offices in Dublin, Galway, corporate finance services in several GMN International has added Birr and Portlaoise. Baker Tilly Malaysia has added Chang European and Asian languages.
www.InternationalAccountingBulletin.com September 2014 y 3 IAB Awards
And the winner is… This month International Accounting Bulletin hosted its annual global industry awards celebrating worldwide best practice in the accounting profession. The awards ceremony was part of a half-day inaugural IAB accountancy forum in London and joined industry leaders and old friends from around the world
ore than 100 industry leaders attended the International staff in 48 locations in 30 countries convinced the judges of its Accounting Bulletin industry awards in London this potential. The new network has reported a fee income increase of month. Three years after the inaugural IAB Awards, the 20% so far in 2014 by adding further members in six countries. M event has grown its reputation and year after year we are TGS has also created a modern brand identity, with currently 60% attracting more and more nominations and attendees. of members adopting the TGS name as a prefix and further firms This year we received very strong nominations across all 13 cat- looking to adopt it in the second half of 2014. egories. The judges were impressed with the international nature of TGS and The shortlist and the winners were decided by the judging panel felt it really reflected the raising star nature of the award. comprising Jane Howard, head of accounting and actuarial liability at Wragge & Co, Association of Chartered Certified Accountants ASSOCIATION OF THE YEAR sponsored by Star Computers (ACCA) head of external affairs Sue Almond, Chartered Institute of Public Finance and Accountancy (CIPFA) chairman Ian Ball and In this category we have a highly commended association, INPACT International Accounting Bulletin editor Ana Gyorkos. International. The judges felt the association demonstrated growth in its culture as well as business growth. They were also impressed by the relationship-based approach and regional activity focus. NETWORK OF THE YEAR Praxity The association was awarded the raising star award in 2013 by IAB RSM and the judges concluded that this year the association has demon- The judges were impressed by the strong nomination material, strated strong growth, a spread of new members, and a clear indica- especially client development and demonstration of a thoughtful tion that its growth is sustainable. approach to achieving growth without compromising quality or With annual revenue of $4.1bn, 33,496 staff, and enhanced delivery service. In 2013 RSM admitted members in 11 countries and con- of internal services to member firms and external services to clients, ducted in-country mergers in Argentina, Brazil, Norway and the UK. Praxity demonstrated strong performance and achievement in the The network grew cross-border referrals by 17% in 2013 and in Q1 past year. 2014 referral figures were up 15%, compared to Q1 2013. With its “Where on Earth” and “RSM World Day” initiatives the network RISING STAR ASSOCIATION OF THE YEAR has successfully strengthened its brand internally and with external interested parties. ANTEA RISING STAR NETWORK OF THE YEAR sponsored by Intuit ANTEA, an association from Spain, has impressed the judges with its quick development and expansion since its inception in 2008. TGS Antea is present in 60 countries with more than 200 offices, $236m in TGS’s growth, in just over two years, into an organisation of 1,300 revenue, and 3,016 staff.
4 y September 2014 www.InternationalAccountingBulletin.com International Accounting Bulletin IAB Awards Awards
AUDIT INNOVATION OF THE YEAR emissions per full-time equivalent by 2015, compared to 2010. The KPMG for its Lean in Audit network reported significant progress in 2013 and thus far achieved With this innovation KPMG has taken the ‘Lean’ customer-oriented an 8% net emissions reduction since 2010. KPMG has also publicly business improvement methodology focusing on delivering quality disclosed its global results and reported to the Carbon Disclosure and value through the eyes of the customer and used it in delivering Project. KPMG also continued its policy of significant investment in a financial statement audit. communities – through pro bono activities, skills-based volunteering, Lean thinking emerged in the early 1990s and quickly became one financial contributions, and general volunteering. of the most widely used business improvement techniques. It is sup- ported by the Lean Enterprise Research Centre, which together with SOCIAL MEDIA NETWORKING CHAMPION OF THE YEAR Harvard University is recognised as one of the centres of excellence for Lean thinking. Due to a significant number of nominations in this category, from The concept of introducing Lean into the audit was conceived single firms as well as global organisations, we decided to hand by KPMG’s Australian firm in 2011 as an idea to improve audit out two awards: one for a single firm and another at international quality and increase value for clients. Thus far the method has been organisation level. introduced to more than 15 audit clients, with more than two-thirds saying the method has improved their experience with the firm. Single firm: Ebner Stoltz ADVISORY FIRM OF THE YEAR The judges were impressed by how the firm managed to increase the number of job application in the past 12 months due to its social media campaigns and by the collaboration between its social media, PwC marketing and HR team. PwC announced at the end of 2013, and finalised in early 2014, its The firm especially focused on Facebook as a key vehicle to acquisition of global consultancy Booz & Co, which has 300 part- strengthen its brand, by communicating news, launches, success ners, 3,000 staff, 57 offices, and $1.4bn in annual revenues. In April stories, and by sharing authentic content that has been informative, the business, now part of the PwC global network, was rebranded engaging and humorous. as Strategy&. This investment by PwC convinced the judges of its commitment Global level: to addressing client demand for a correct strategy, and its ability to KPMG execute this via an experienced and accountable advisor. In Q1 2014 KPMG’s global LinkedIn company page acquired 27,000 followers and its Twitter account acquired 13,900 followers, bring- EMPLOYER OF THE YEAR ing the total to 115K+ and 100K+ followers, respectively. The network also launched an Instagram account to share photos for industry and recruitment events. Shortly after launch, it achieved a Grant Thornton International 61% engagement rate, the highest of all social channels used by the The judges were impressed by the network’s strong commitment to network. its employees, its secondment programmes, and its focus on quality. Like last year, KPMG’s social media campaign, World Economic In 2013, the network set out to create a global Employee Value Forum Live (WEFLIVE), was one of the most successful campaigns, Proposition (EVP) for the organisation. While the EVP is still in with enhancements introduced in filtering, search and data visualisa- development, the network says it will be used to clarify what it has tion features. to offer to potential employees in a clear and powerful manner, enabling Grant Thornton to attract and retain the best talent in the IT VENDOR OF THE YEAR marketplace. To support the learning and development programme the network also has an Advanced Manager Programme as well as a Leadership Xero Foundation, which is helping staff develop into better leaders. The In the past 12 months, the number of UK businesses using Xero judges were also impressed by the network’s global talent mobility more than doubled from 22,000 to 47,000, and globally Xero now programme, which has to date supported 320 secondments across has 284,000 customers. Xero’s online accounting software is based the network. entirely in the cloud, providing access to up-to-the-minute data which helps customers get a better understanding of their current SUSTAINABLE FIRM OF THE YEAR financial position, take control of their cash flow, and run their busi- nesses more effectively. The achievements which convinced the judges were the strategic partnerships which the company entered into in KPMG the past 12 months. This is a third win in row for KPMG in this category and goes to In March 2014, Xero announced a major strategic alliance with Big show the global network’s strong commitment to running a sus- Four firm KPMG UK. In the same month, it also reached agreement tainable business. After surpassing the Phase I emissions reduction with the UK’s RBS Group for the supply of direct bank feeds for target, KPMG’s current ambition is a further 15% reduction in net Royal Bank of Scotland and NatWest customers.
www.InternationalAccountingBulletin.com September 2014 y 5 Awards
■ Praxity team with Association of the Year Award
■ KPMG’s Mark Davies recieving the Audit Innovation of the Year Award ■ Antea’s chairman Antoni Gomez with IAB’s Vincent Huck
■ Team at Nexia International and its winning firm Ebner Stolz ■ HLB CEO Rob Tautges Awards
■ RSM team celebrating the Network of the Year Award
■ PwC UK’s Claire Stokes reciving the Advi- ■ Antea’s chairman Antoni Gomez with IAB’s Vincent Huck sory Firm of the Year Award
■ HLB CEO Rob Tautges ■ Keith Tracey, Aon ■ Three awards for KPMG Awards IAB AAwwarardsds International Accounting Bulletin
IAB 2014 Lifetime Achievement Award Arnold Schilder Arnold Schilder became chairman of the member of the managing board of the Dutch International Auditing and Assurance Central Bank, responsible in particular for Standards Board (IAASB) in January 2009. banking regulation and supervision. In addi- Since his appointment, he has played a key tion, he served as the chair of the Basel Com- role in guiding the IAASB as it strives to mittee on Banking Supervision’s Account- enhance the quality and consistency of prac- ing Task Force from 1999 to 2006, and as tice throughout the world. Ninety jurisdic- a member of the Public Interest Oversight tions around the world already use or are Board from 2005 to 2008. During 1994 and in the process of adopting or incorporating 1995 he also served as president of the Ned- IAASB’s International Standards on Audit- ing (ISAs). Recently it was announced that erlandse Beroepsorganisatie van Account- as of 2015 Schilder will continue to lead the ants (NBA, formerly Royal NIVRA). IAASB for another three-year term. Schilder also served as part-time profes- From 1972 to 1998, Schilder worked sor of auditing at the Universities of Amster- with PwC, first in the small and medium- dam and Maastricht from 1988 to 2009. sized entities practice, and since 1985 as an He studied theology and accountancy and international audit partner. earned a Ph.D in business economics in From 1998 to 2008, Schilder was a 1994 with a thesis on auditor independence.
IAB Young Accountant of the year 2014 Kader Kaneye In 2010, at the age of 25, Kader Kaneye was 200 and staff from 7 to 41. KMC Niger is the summer 2014 Washington Fellowship appointed chief executive officer of KMC now ranked among the top three consulting for Young African Leaders, a new flagship Niger and became the youngest executive firms in the country. programme of US President Obama’s Young partner in Niger. Through his leadership, Kaneye has African Leaders Initiative. After his appointment, he successfully addressed prominent local and global Beside his managing position with KMC restructured and developed KMC Niger, cre- issues, such as the promotion of woman in Niger, Kaneye serves as regional executive ating new services lines for accounting, tax the workplace (women represent more than and law, and executive training. As a result, one-third of the KMC Niger staff and hold partner of HLB KMC West Africa and as the the numbers of clients and professional staff key positions), and the promotion of Islamic youngest vice-president in the history of the are today five times higher than they were finance. Professional Chartered Accountants Board four years ago, with clients up from 40 to Kaneye was recently selected to attend in Niger (ONECCA Niger).
IAB 2014 Personality of the Year Paul Druckman Over the past 12 months, Paul Druckman more regulators and companies across the and the International Integrated Reporting globe are now going ‘integrated’. Council (IIRC), of which he is chief executive But the framework’s release has not been officer, were able to enhance significantly inte- the only achievement in the past year. By coop- grated thinking in the accountancy industry. erating with standard-setters and institutes The release of the world’s first-ever inte- through MoUs and networks, Druckman grated reporting (
8 y September 2014 www.InternationalAccountingBulletin.com International Accounting Bulletin France COUNTRY survey
Signs of resilience in a tough economy After another year of economic inertia in France, opinion is divided on whether anticipated modest growth in 2014 and 2015 will translate into increased professional activity. Paul Golden reports
rance is in an unusual position within style than previous generations of account- the social area (works council and employ- the major Eurozone economies. While ants and finally, implementation of new tech- ers’ organisations).” the economy displayed considerable nologies requires significant investment.” Less positive are the changes effected by resilience through the global financial C l i e n t s n o w d e m a n d h i g h - l e v e l s e r v i c increased regulation. “As a result, account - F e in all aspects of running their business in ing firms spend lots of time filling in docu- crisis, supported by steady private consump- tion, recovery has been slow to take hold as addition to the traditional services of prepar- ments to fulfil the legal, tax and social obli- efforts to reduce the government deficit over ing financial statements, tax returns and pay gations of our clients,” says Duhau. “There’s the past three years and structural impedi- slips, she continues. “There’s a lot of compe- a general feeling that we’re overwhelmed by ments (including a loss of external competi- tition as a new generation of ‘digital natives’ administrative works with little added-value tiveness) created a drag on growth. face the massive retirement of an older gen- and don’t have enough time to focus our The IMF refers to signs of a gradual eration of accountants and auditors. Howev- expertise on high-value tasks. The services uptake in economic activity in its latest fore- er, not all firms are ready as it is a transition in increasing demand are forecasts analysis, cast for the country, predicting that France’s that requires a significant effort in terms of assistance in financing operations and com- economy will expand by 0.7% in 2014 and strategic planning and reorganisation.” pliance with new regulatory requirements.” 1.4% next year, although unemployment is Serge Laviale, founder of MSI member Yves Sonier, CEO of Nexia member firm not expected to show an appreciable decline firm Laviale refers to demand from mid- Groupe Sefico reckons that in the context of until 2016. The Government’s stability and sized companies for advice and consultancy a weak economy, estimates of 2% growth in national reform programme commits to on a wide range of issues, although Bettina accounting services over the next 12 months public spending cuts of €50bn over the next Cassegrain (partner and head of audit at are pretty impressive and will be driven by three years as it seeks to reduce the deficit HLB member firm Cogep) says the difficult outsourcing and tax compliance services and create room for tax cuts. economic situation has highlighted the fact for large and medium-sized companies and According to Marc de Premare, interna- that the accountant remains a pivotal figure assistance in areas such as consolidation, tional liaison partner at Crowe Horwath for many businesses. merger and acquisition and IFRS. France, the performance of the accounting “Taxation and HR/payroll services are in “In the areas of tax and legal service we industry is closely aligned to the French most demand because of the ever-changing are in competition with lawyers and advis- economy in that it did not suffer a strong legislation,” says Cassegrain. “Very often ers, but when we have the bookkeeping or recession, but it is not heading toward any matters are so complex that especially small the financial statements we always offer the significant growth in the near term. entities cannot afford to have an appropri- tax and legal review for the company and its “Some of the services are becoming com- ately trained person in-house. In the current directors,” explains Thierry Benyamin, part- modities with significant competition and economic climate it’s very important for the ner at Alliott Group member firm 3Apexco. declining prices,” De Premare says. “On the owners of small entities to know how to Although clients really need more advi- other hand, value-added services such as per- optimise their tax situation and transfer their sory support, they are hesitant about spend- formance consulting, tax planning and cor- business to their children and we can help ing money on such activity adds Stéphane porate finance services are in great demand. them to do this in the most efficient way.” Loubières from MGI member firm FCN. As accountants, we see the impact on busi- It’s increasingly common for companies to “It can be difficult to convince clients that ness of the lack of strong reforms and we appoint their auditors, advisors or account- despite their problems they should come to hope further reforms intended by our gov- ants through tenders and although fees are us for guidance.” ernment will happen.” not necessarily the only selection criteria, Analysis of the jobs market indicates that BKR member firm Exponens partner tenders nevertheless exert a direct influence recruitment is still high, but significant issues Jacqueline Wolfovski admits that the past on fee levels observes Francois Duhau, presi- remain according to Michel Leger, managing three years have been difficult for the French dent PKF Ampersand. partner at BDO France. “Revenue growth accounting industry. More encouragingly, he refers to an and margin are low in a very competitive “Our deontological (duty-based) code increasing role and responsibility in the landscape. We see two strategic options: going has evolved – for instance, communication detection and support of companies facing low cost or trying to differentiate and provide and advertising are now allowed as well as difficulties. “Our profession is clearly identi- value-added services and relationships. The different capital structuring for our firms – fied as a trusted third party whose expertise real competition is for value-added services and there is much political debate on ‘regu- is solicited by both companies and regula- and advisory: clients are demanding dash- lated professions’, which include statutory tors. From that perspective, we can be opti- boards and reporting, benchmarks or advice auditors and chartered accountants as well mistic as to the development of the industry. on their specific sector or business issues.” as solicitors, lawyers and court clerks. Gen- For instance, parliament assigned new mis- Most of the firms interviewed by IAB eration Y is also much different in its work sions in 2014 to accountants and auditors in referred to a continuation of the downward
www.InternationalAccountingBulletin.com September 2014 y 9 COUNTRY survey France International Accounting Bulletin
pressure on fees highlighted in last year’s obtain productivity gains.” tions free of charge or almost free of charge.” report. According to Nexia’s Sonier, the Alliott Group’s Benyamin says his firm has BKR’s Wolfovski suggests that falling average hourly rate on statutory audits has developed new services such as domiciliation profitability is an even more pressing issue fallen from €160 to €100 as a result of the as well as playing an active role in organisa- for smaller firms in particular. “Clients are Big Four lowering their fees. tions such as the Invest in France Agency. keeping our billing rates under scrutiny, but It’s a battle to sell accountancy advice at “Steps we have taken to compensate for our personnel costs are higher due to the the right price, as clients don’t always see falling fees include offering a wider service increasing level of social charges on wages. this work as adding value and too often range adapted to each client, increased spe- Audit fees for the listed companies of the select their accountant on price, adds MGI’s cialisation and heightened physical pres- CAC 40 decreased by 3.8% in fiscal year Loubières. “The other problem is getting ence,” explains Fredy Fritzinger, managing 2013 as compared to fiscal year 2012.” paid. Our clients first pay their employees partner HLB Groupe Cofimé. There have also been M&As over the last (because they have no choice), their materi- Firms have to offer additional services 12 months as firms seek economies of scale. als suppliers (otherwise they have nothing to which correspond to client needs in order For example, last summer Exponens inte- sell) and social contributions and tax (they to remain competitive, agrees HLB’s Cas- grated Synergie Audit, a Paris accounting don’t want to have problem with the state). segrain. “For example, the burden on and audit firm employing 20 people. Then they think that we can wait and they smaller companies in terms of continuing One of the most interesting issues in the will only pay us when they have spare cash. professional education appears significant French accounting profession is how mem- It’s not acceptable when you consider that and costly at first sight and as a result, not bers view EU efforts to reform audit and the 75% of our own expenses are salary and all companies are fully compliant or even possible implications for joint audit. social contributions.” aware of their obligations. “We have set up De Premare says his firm strongly believes His firm’s response has been to offer new a specialist service with CPE Formation that in the joint audit model that’s been in place services while developing a niche strategy. analyses the continuing professional educa- in France for many years. “It’s been one of “We have to be considered as a specialist in tion requirements of each firm to ensure they the drivers of a more open audit market and our sector and not as a generalist firm, but are compliant with relevant employment has helped us maintain our position as joint we still have to be able to provide a wide legislation and processes reimbursements auditor of some of the largest French com- spectrum of services. So we help our employ- for training costs issued by the government. panies. We think EU audit reform doesn’t ees specialise and train them to obtain Clients often do not realise that thanks to do enough to promote joint audits and we expertise in their fields while investing these reimbursements they can fulfil their fear joint audit will not spread out into other significantly in advanced IT systems to continuing professional education obliga- countries in Europe.
■■ France Networks – fee data Fee split (%)
Corporate Fee income Growth Audit & Tax Management Corporate recovery/ Litigation Rank Name (€m) rate Accounting services consulting finance Insolvency support Other Year-end 1 Deloitte* (1) 984.0 10% ------May-14 2 KPMG* 894.0 6% 43 ------Sep-13 3 EY* 778.0 3% 44 ------Jun-13 4 PwC* (2) 656.0 –5% 63 15 - - - - 22 Jun-13 5 Mazars* 314.0 2% 88 1 5 - - - 6 Aug-13 6 Kreston International* 164.7 19% 80 5 2 2 1 - 10 Oct-13 7 Grant Thornton International* 142.1 2% 80 9 - - - - 11 Sep-13 8 Baker Tilly International* 106.3 0% 66 17 5 - - - 12 Dec-13 9 Crowe Horwath International* 90.6 4% 73 14 3 1 - - 9 Dec-13 10 BDO* 73.2 1% 83 4 1 1 - 1 10 Sep-13 11 RSM International* 64.0 –5% 67 13 17 2 - - 1 Dec-13 12 Nexia International* 54.6 2% 78 6 4 4 - - 8 Jun-14 13 HLB International* 43.5 3% 61 18 7 3 - 4 7 Dec-13 14 PKF International* 41.3 –1% 74 16 8 2 - - - Jun-13 15 Moore Stephens International* 22.0 –5% 64 7 1 5 - 4 19 Dec-13 16 ECOVIS International* 3.4 –4% 60 20 20 - - - - Dec-13 Total revenue/growth 4,431.7 4%
Notes: (e) IAB estimates. Made on the basis of staff growth informtion provided to the IAB. *Disclaimer = Only data from the named member firm or the exclusive member firms within a network/association is included. Data relating to correspondent and non- exclusive member firms is not included. (1) Deloitte organises fee income in the following business lines: audit and consulting generated €560m, accounting services €331m and tax €93m. (2)PwC ‘Other’ includes: management consulting, transactions, strategy. Source: International Accounting Bulletin
10 y September 2014 www.InternationalAccountingBulletin.com International Accounting Bulletin France COUNTRY survey
According to MSI’s Laviale, French audi- said that we’re still awaiting the position of future of the cohabitation of two disciplines tors work to defend the domestic model and the French Government on this question in (chartered accountant and statutory audi- are attentive to maintaining the appropriate particular as European governments have a tor) exercised by the same professionals. The balance between the benefit to companies of certain latitude concerning the transposition stakes are high in France, just as they are in the certification of financial statements and of the text in each member state.” Germany. For the joint audit question, that’s the desire to allow small and medium audi- Duhau at PFK Ampersand observes that not a problem for us because we’re used to tor firms to continue to exist. while European audit reform has been much this in France, as it’s been compulsory for Anne Mouhssine, audit partner at Expon- discussed, the Government now has two groups with consolidated statements for ens and chair of BKR EMEA audit commit- years to translate the directive into French quite a long time.” tee says she’s concerned the EU directives law so it’s too early to know exactly how Looking ahead BKR’s Wolfovski express- will increase market concentration. “Joint it will affect the profession. BDO’s Leger es confidence in the growth potential of the audit is not mandatory in France except for also points out that it’s difficult to be defini- accounting industry. “Recent legislation is clients with consolidated accounts. The joint tive about the impact of EU reform in the expanding our markets and our mission. In audit obligation has not been extended but absence of full implementation details. March, a law was published on the financial has been identified as best practice.” “French auditors are very protectionist transparency of work councils’ accounts and Concerns such as market concentration and and don’t want to change the six-year period we’re optimistic about the possible authori- the necessity to clarify the role of the auditor for the legal audit mandate,” says Benyamin sation of cash handling on behalf of our cli- (expectation gap) seem necessary and make at Alliott Group. “So, if the efforts of the ents. We can also get involved in the digital sense, says Cassegrain at HLB. “It appears the EU are to change the mandate to a one-year technology arena, shaking up competition outcome of the reform is a lot more concerned period this won’t be accepted in France. On and business models to position our profes- with organisational aspects. Nevertheless, the the other hand, joint audit is a French crea- sion as a major player.” (In France, a works profession in France approves of the role joint tion so it allows auditors to increase their council or comité d’entreprise is mandatory audit and the audit of SMEs have had during activities on big-sized firms or in consolidat- in any company with 50 employees or more.) the discussions and the outcome shows the ed accounts audit. This has worked for years Duhau believes growth in the account- French model of joint audit – which has so in France and permits mid-size audit firms to ing industry will rely on increasing deliv- far been unique – is regarded as viable and be part of the big audit market.” ery of high-value-added services to clients leading to improved audit quality.” French professionals are waiting to see the and implementation of new technologies, “As regards market concentration, there’s practical consequences and especially how procedures and behaviour to automate all a concern mandatory auditor rotation will the European Directive will be turned into production processes. “In a world where achieve the opposite of what was intended French law, adds MGI’s Loubières. “There complexity and regulations are increasing, and in fact increase concentration. Having are various options, but the key point is the there’s a need for specialists who can deliver
■■ France ASSOCIATIONS- fee data Fee split (%)
Corporate Fee income Growth Audit & Tax Management Corporate recovery/ Litigation Rank Name (€m) rate Accounting services consulting finance Insolvency support Other Year-end 1 Praxity* 323.0 3% 88 1 5 - - - 6 n/a 2 PrimeGlobal* 260.0 –3% 59 22 4 2 - 1 12 Mar-14 3 BKR International* 233.0 12% 65 10 10 - - - 15 Dec-13 4 MSI Global Alliance* 67.6 1% 48 49 - 3 - - - Dec-12 5 DFK International* 56.1 10% 78 9 7 3 - 1 2 Sep-13 6 MGI* 47.8 10% ------Jun-13 7 EuraAudit International* 32.2 18% 88 1 3 - - - 8 Dec-13 8 GMN International* 14.5 2% 70 10 - 10 - - 10 Sep-13 9 IAPA* 10.3 2% 80 12 - - - - 8 n/a 10 Morison International* 10.0 –3% 88 11 - - 1 - - Dec-13 11 KS International* 8.3 –18% 72 14 1 1 - - 12 Dec-13 12 Alliott Group* 4.9 –10% 90 6 1 - - - 3 Dec-13 13 INPACT International* 4.7 –16% 47 41 9 - - 1 2 Dec-13 14 Integra International* 4.6 10% 60 30 10 - - - - Jun-14 15 A.C.E.E.* 3.4 7% 97 3 - - - - - Dec-13 Total revenue/growth 1,080.5 4%
Notes: *Disclaimer = Only data from the named member firm or the exclusive member firms within a network/association is included. Data relating to correspondent and non-exclusive member firms is not included. Source: International Accounting Bulletin
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services to help clients make their lives easi- taken for decades will need to be taken even- over the next two or three years.“We’re con- er.” Fritzinger suggests a crisis of confidence tually, which will have an impact on consum- cerned as the economic climate generates our has become entrenched. “Furthermore, the ers’ state of mind. Therefore, the risk is high activity, so we’re careful in our decisions and economic measures our politicians haven’t that the economic situation will remain tense recruitment policy,” concludes Benyamin. <
n France NETWORKS - staff data
Total staff Growth Partners Professional staff Administrative staff Offices Rank Name 2013 2012 rate 2013 2012 2013 2012 2013 2012 2013 2012 1 Deloitte* 8,986 7,950 13% 513 470 7084 6,230 1389 1,250 225 200
2 KPMG* 8,300 8,000 4% ------217
3 EY* 4,676 5,304 –12% ------
4 PwC* 4,000 4,000 0% ------25 25
5 Mazars* 2,740 2,503 9% 157 169 2,230 1,968 353 366 39 38
6 Kreston International* 1,781 1,820 –2% 130 131 1,514 1,550 137 139 99 100
7 Baker Tilly International* 1,520 1,491 2% 132 132 1,213 1,207 175 152 84 84
8 Grant Thornton International* 1,339 1,352 -1% 103 112 1,049 1,065 187 175 22 22
9 Crowe Horwath International* 904 919 –2% 105 107 716 720 83 92 59 69
10 BDO* 815 800 2% 75 73 630 626 110 101 35 35
11 RSM International* 540 540 0% 52 52 443 443 45 45 7 9
12 Nexia International* 524 527 –1% 61 64 406 398 57 65 15 16
13 HLB International* 329 327 1% 33 32 254 250 42 45 36 36
14 PKF International* 306 324 –6% 47 50 235 249 24 25 6 6
15 Moore Stephens* 213 220 –3% 21 21 166 173 26 26 5 5
16 ECOVIS International* 34 35 –3% 3 3 30 31 1 1 2 2
Totals 37,007 36,112 2% 1,432 1,416 15,970 14,910 2,629 2,482 659 864
Notes: *Disclaimer = Only data from the named member firm or the exclusive member firms within a network/association is included. Data relating to correspondent and non-exclusive member firms is not included. Source: International Accounting Bulletin
n France Associations - staff data
Total staff Growth Partners Professional staff Administrative staff Offices Rank Name 2013 2012 rate (%) 2013 2012 2013 2012 2013 2012 2013 2012 1 PrimeGlobal* 3,538 3,340 6% 422 255 2,801 2,876 315 209 198 200
2 Praxity* 2876 2623 10% 166 178 2350 2073 360 372 46 45
3 BKR International* 2,684 2,500 7% 280 260 2,404 2,240 - - 180 170
4 MSI Global Alliance* 1,010 950 6% 120 120 800 780 90 50 75 74
5 MGI* 533 537 -1% 65 68 91 91 377 378 27 26
6 EuraAudit International* 352 332 6% 36 37 292 266 24 29 25 21
7 DFK International* 351 329 7% 36 33 274 257 41 39 18 18
8 GMN International* 175 159 10% 10 11 150 134 15 14 9 9
9 IAPA* 123 122 1% 14 14 40 41 69 67 8 8
10 Morison International* 82 84 -2% 11 12 64 61 7 11 1 1
11 KS International* 80 81 -1% 11 11 59 60 10 10 4 4
12 INPACT International* 52 62 -16% 7 7 40 50 5 5 3 4
13 A.C.E.E.* 48 43 12% 5 5 41 37 2 1 7 7
14 Alliott Group* 47 52 -10% 7 9 34 37 3 6 3 2
15 Integra International* 46 43 7% 4 5 40 35 2 3 1 1
Totals 11,997 11,257 7% 1,194 1,025 9,480 9,038 1,320 1,194 605 590
Notes: *Disclaimer = Only data from the named member firm or the exclusive member firms within a network/association is included. Data relating to correspondent and non-exclusive member firms is not included; Source: International Accounting Bulletin 12 y September 2014 www.InternationalAccountingBulletin.com International Accounting Bulletin Latin America COUNTRY survey
Latin American leaders predict modern day gold rush Positive economic indicators, SMEs going international, and accelerated regional economic integration are sources of optimism for accounting firms in Latin America, asV incent Huck reports
any are the heroes who popu - Bulletin interviews firm leaders from the ■■ Latin America late Latin America’s history, but region for its annual survey, there’s a sense few have left such a long-lasting that the Bolívarian dream, while it might At a glance mark over the whole of the region not be so at the political level, is still alive revenue M on the economic scene. as Simón Bolívar. Nicknamed El Libertador, in the early As the different countries in the region Most revenue: Deloitte, $1,474.5m years of the 1800s Bolívar led to independ- enjoy comfortable level of growth and busi- Least revenue: INPACT, $2.3m ence from the Spanish empire: Ecuador, nesses start to trade across borders it is con- Highest growth: UC&CS Global, 37% Peru, Bolivia, Venezuela and Colombia, tributing to the growth of accounting net- Lowest growth: INPACT, –18% which at the time included the country works and associations in the region. now referred to as Panama. Today he is still “In the last 10 years you can’t ignore the staff quoted and referenced in a lot of the region’s importance of Latin America in the global Largest workforce: Deloitte, 20,848 political discourse. economy,” RSM Latin America regional Smallest workforce: INPACT, 125 But Bolívar’s vision went beyond inde- leader Brendan Quirk explains. “It’s very pendence; he imagined a unified Latin important to have a strong representation America under one leadership. To that there for global companies. The growth in economic indicators effect he founded and presided for 11 years Latin America of small and medium busi- Regional GDP: $6.1trn over the republic of Gran Colombia which nesses has provoked an increase in business- Regional GDP growth: 3.4% included present-day Colombia, Venezuela, es growing inter-regionally, which in turn GDP per capita (PPP): $12,818 Ecuador, Panama, northern Peru, western boosted our growth.” Inflation (CPI): 6.1% Guyana and northwest Brazil. Current account balance: –1.7% “If my death contributes to the end of Regional integration Unemployment rate: 6.7% partisanship and the consolidation of the Baker Tilly International regional director Population: 588m Union, I shall be lowered in peace into my for Latin America Ed Rivera says that the grave,” he once said. regional integration in Latin America is a IAB survery indicators Unfortunately for him, when Bolívar died trend that’s slowly building over the past at the age of 47, his dream of a unified Latin decade. “A large part of our clients doing Revenue per employee: $55,280 America was far from reality and it would international work do so with neighbour- Staff density: 1 accountant per 5,642 ppl not survive his death. Latin America did ing countries,” he says.“So there’s defi - Notes: Totals apply to IAB surveyed data only. This includes gain independence, but in the form of vari- nitely an economic convergence that is geo- firms that belong to global networks and associations ous countries and autonomous territories, graphically driven.” Source: International Accounting Bulletin, IMF, World Bank allies one day and foes the next. The opportunities for regional inte - However as International Accounting gration through trade come naturally,
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Rivera explains. “There’s one language their growth in recent years. In 2013, sur- compared to the previous year, below and very similar cultural traditions across veyed networks in Latin America saw their the 6.5% average annual growth rate Latin America.” revenue increase by an average of 7%, up to recorded in the last decade, according to There are actually two languages in Latin $5,354.1m, compared to $5,018.2m in the the country’s National Institute of Statistics America: Spanish and Portuguese, but the previous year. Surveyed association equally and Information. latter is only spoken in Brazil. However due saw their revenues increase by an average The Peruvian economic slowdown led to to the similarity between both languages 8% in fiscal year 2013, up to $406.8m. political storms as the Congress called for a lingua franca has appeared in the region While interviewed firm leaders say they the Peruvian finance minister Luis Miguel referred to as Portunhol or Portuñol, which see opportunity and growth all across the Castilla Rubio’s resignation. Meanwhile freely mixes both Spanish and Portuguese. region, some countries or sub-regions have his Colombian counterpart Mauricio Some like Quirk jokingly refer to it as the experienced more acute growth than others. Cárdenas Santa María was reappointed business language in the region. This is especially the case in Colombia and for President Juan Manuel Santos’s second Peru, which in recent years have fought a presidential term. Economic successes tough battle for the title of fastest-growing Quirk says that Colombia overtaking Latin America is one of the regions in the economy in Latin America. Peru as the fastest-growing large economy world that has best overcome the 2008 eco- in the region “speaks very highly of Peru as nomic turmoil. Columbia leads well as Colombia. Peru has been growing at As early as 2010 the region was enjoying a Colombia, so far, is leading the race. above 5% for the past 10 years”. GDP annual growth of 5.9% according to According to interim data released in June Rivera says Peru’s growth enjoyed less the World Bank, and even though this fig- by the National Administrative Depart- coverage in the media than Colombia’s, but ure has declined year-on-year to reach 2.4% ment, Colombia’s GDP grew by 6.4% in it was equally as impressive. in 2013, it is still the third fastest-growing the first quarter of the year compared to “Colombia’s economy has grown phe- region in the world behind Eastern Asia and the same period in 2013, and by 2.3% com- nomenally and so did our member firms the Pacific and Africa. pared to the previous quarter. there,” he says. Accounting networks and associations Peru’s economy on the other hand Crowe Horwath International regional made the most of this dynamic to boost grew by 4.8% in the first quarter of 2014 executive Americas Eduardo Pestarino ■■ Latin America Networks – fee data Fee split (%)
Corporate Fee income Growth Audit & Tax Management Corporate recovery/ Litigation Rank Name (US$m) rate Accounting services consulting finance Insolvency support Other Year-end 1 Deloitte* (e) 1,474.5 6% ------May-13 2 PwC* (e) 1,028.0 –1% ------Jun-13 3 EY* (e) 910.8 12% Jun-13 4 KPMG* 851.0 5% 53 21 - - - - 26 Sep-13 5 BDO* 194.9 16% 58 16 - - - - 26 Sep-13 6 Grant Thornton* 169.2 16% 47 12 - - - - 41 Sep-13 7 Crowe Horwath International* 96.6 17% 66 19 7 3 - 1 4 Dec-13 8 RSM International* 84.7 11% 64 16 13 - - - 7 Dec-13 9 Moore Stephens International* 77.3 13% 68 19 6 3 - - 4 Dec-13 10 Baker Tilly International* 75.6 7% 59 15 12 7 - - 7 Jun-13 11 SMS Latinoamerica (1) 67.8 5% 47 28 18 1 3 - 3 Dec-13 12 Kreston International* 57.3 10% 52 29 9 2 - - 8 Oct-13 13 Russell Bedford International* 56.9 4% 39 14 24 - - - 23 Jun-13 14 PKF International* 47.7 11% 71 15 7 1 - - 6 Dec-13 15 Nexia International* 46.3 18% 58 16 9 - - 1 16 Jun-13 16 Mazars* 42.2 8% 82 8 5 3 - 1 1 Aug-13 17 HLB International* 32.4 11% 56 12 26 - - 7 Dec-13 18 UHY International* 24.9 29% 49 23 10 2 3 4 10 Dec-13 19 AUREN* 16.0 9% 53 26 12 4 - 3 2 Dec-13 Total revenue/growth 5,354.1 7%
Notes: (e) IAB estimates made on the basis of staff growth informtion provided to the IAB. *Disclaimer = Only data from the named member firm or the exclusive member firms within a network/association is included. Data relating to correspondent and non- exclusive member firms is not included. (1) SMS Latinoamerica’s figures include US$2.5m from correspondent and non-exclusive member firms. Source: International Accounting Bulletin
14 y September 2014 www.InternationalAccountingBulletin.com International Accounting Bulletin Latin America COUNTRY survey
believes Colombia’s economic boom has national association of which it was a in 2013, Chile retained its position as the also helped the country to rebrand its image founding member. most competitive economy in Latin America on the international scene. While 10 years Gomez said the process of securing a according to the World Economic Forum’s ago to many outsiders Colombia was seen member firm took approximately four Global Competitiveness Report. as the home of the drug trade, it now enjoys years, as finding the right partners which “This is thanks to its traditional strengths: a much more positive image with more could meet the criteria required to be part a strong institutional set up with low levels international investment coming into the of an international network turned out to of corruption and an efficient government, country and an increase in the number of be a challenge. solid macroeconomic stability with a bal- businesses created. “We talked to at least 15 firms that anced public budget and low levels of public “Colombia has changed dramati - were potentially interested, but many debt,” the report read. cally,” Pestarino says. “And not only in back off when they know about the strict Bogota but in Cali, Medellin and other requirements and quality standards Election year regions of the country; you feel the uptake required to work within our international KPMG South America senior partner of the economy.” network,” he said. David Bunce believes the economic slow - AUREN, which recently joined the down of 2013 can be attributed to the Underdog country Forum of Firms, will have one office in fact that it was an election year in Chile. Speaking to IAB sister publication The Bogota of around 80 employees, and a sec- Michelle Bachelet was elected with 62% of Accountant, ANTEA chairman and ond in Barranquilla, employing five. In the the votes in the second round of the elec- AUREN president Antoni Gomez sum - absence of an official ranking, Gomez esti- tion in November 2013. It’s Bachelet sec - marises: “This is the story of an underdog mated AUREN would be among the top 15 ond presidency after occupying the position country facing drug-related violence, which firms in Colombia. between 2006 and 2010. all of a sudden is known for its extraordi- “Because of the new government’s more nary potential.” Chile left-leaning policies there’s a bit of concern On 13 October AUREN will integrate While it doesn’t enjoy the same media expo- which explains the slight slowdown in the Colombian firm TH&R Consultores y sure as neighbouring Peru or even Colom- economy,” Bunce says. “Still, the economy’s Auditores within its international net - bia, Chile remains a very strong economy doing quite well and KPMG has managed to work. The network was already present in the region. Despite seeing its annual GDP grow by 20% in Chile.” in the country through ANTEA, an inter- growth drop from 5.4% in 2012 to 4.1% He says KPMG is a late comer to the
■■ Latin America ASSOCIATIONS – fee data Fee split (%)
Corporate Fee income Growth Audit & Tax Management Corporate recovery/ Litigation Rank Name (US$m) rate Accounting services consulting finance Insolvency support Other Year-end 1 Praxity* 51.6 0% 79 11 6 2 - 1 1 n/a 2 UC&CS GLOBAL* 44.8 37% 75 15 10 - - - - Dec-13 3 CPA Associates Internatioal* 40.5 6% 63 22 11 - - - 4 Sep-14 4 KS International* 39.4 3% 21 7 2 3 1 - 67 Dec-13 5 PrimeGlobal* 38.8 –3% 56 21 10 3 - 2 8 May-14 6 DFK International* 35.8 28% 55 15 12 1 1 1 15 Sep-13 7 ANTEA* 32.9 13% 36 16 8 3 1 30 6 Dec-13 8 MGI* 22.6 19% ------Jun-13 9 BKR International* 20.0 0% 55 32 - - - - 13 Jun-13 10 Morison International* 19.9 4% 60 25 7 2 - 1 5 Dec-13 11 MSI Global Alliance* 17.8 -13% 84 6 2 - - - 8 Dec-13 12 Integra International* 10.7 11% 65 25 10 - - - - Jun-14 13 GMN International* 9.7 8% 64 23 5 1 - 3 4 Sep-13 14 Abacus Worldwide* 8.3 2% 27 8 13 11 2 17 22 Dec-13 15 IAPA* 7.6 –11% 71 14 8 - - - 7 n/a 16 EuraAudit International 3.9 3% 60 21 10 1 - 5 3 Dec-13 17 INPACT* 2.3 –18% 45 43 4 1 - 1 5 Dec-13 Total revenue/growth 406.8 8%
Notes: *Disclaimer = Only data from the named member firm or the exclusive member firms within a network/association is included. Data relating to correspondent and non-exclusive member firms is not included. Source: International Accounting Bulletin
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Chilean market and is still quite small com- size of the Panama Canal. Expected to be in 2013) and Mexico (GDP of $1.3trn in pared to the rest of the Big Four. “But we finished by 2016, the project intends to dou- 2013) have continued to play an important have been successful in the last few years in ble the capacity of the canal. role in the growth of accounting networks growing our market share,” he says. “Panama is getting a lot of mentions as and associations in the region. the fastest-growing economy in the region “We consider Mexico and Brazil part Panama because of the canal and because there’s a of the key economic centres of the world,” A part of Latin America that’s often dis - lot of financial services and tax incentives in Pestarino at Crowe Horwath says. regarded is Central America. Yet the the country,” RSM’s Quirk explains. “They Those two countries play such a key sub-region, driven by the rise of Panama is have a tax-free zone and it’s also very stra- economic role that they can influence the gaining importance on the economic stage. tegically located regionally, so a lot of head- overall performance of a firm in the region. According to the World Economic Forum’s quarters in the region are set up in Panama.” KPMG, for example, has seen its revenue Global Competitiveness Report, Panama is BDO chief executive officer for the Amer- grow by 5% in Latin America in the year the second-most competitive country in the icas Richard Payette believes Central Amer- to 30 September 2013, but Bunce explains region and the 40th out of the 148 countries ica is often wrongly overlooked and is a very that he expects lesser results in 2014 as the ranked in the report. interesting sub-region. “We had significant Brazilian economy slows down. In the past three years, the country has growth there led by our firm in Panama In the first two quarters of 2014, Brazil’s revamped its infrastructure in order to make which grew by 33% in the last year,” he GDP has dropped by 0.1% and 0.2%. Pes- the most of its geo-strategic location and is says. “There are a lot of economic activities tarino argues that this is due to extraordi- aiming to become a major transport hub for in Panama with the canal building works nary circumstances such as the 2014 FIFA the region. During that time, the govern- and it attracts a lot of foreign investments.” World Cup which was hosted in Brazil and ment of Panama has also strengthened the the upcoming presidential elections in Octo- local financial market and addressed social The big two : Brazil and Mexico ber and November which have impacted the issues such as corruption and crime. Despite the emergence of new economic hot economy. He expects the Brazilian economy Most notably in 2007 Panama launched spots, in the last year, Latin America’s two to pick up again in 2015. an estimated $5.25bn project to expand the largest economies Brazil (GDP of $2.3trn “There’s a chance the change of
n Latin America NETWORKS – staff data
Total staff Growth Partners Professional staff Administrative staff Offices Rank Name 2013 2012 rate 2013 2012 2013 2012 2013 2012 2013 2012 1 Deloitte* 20,848 19,654 6% ------
2 EY* 18,735 16,698 12%
3 PwC* 12,896 12,236 5% ------
4 KPMG* 10,993 10,501 5% 508 487 8,625 8,191 1,860 1,823 - -
5 BDO* 3,907 3,573 9% 210 187 3,143 2,862 554 524 73 65
6 Grant Thornton* 3,784 3,437 10% 184 204 3,128 2,859 472 374 59 54
7 Crowe Horwath International* 2,701 2,627 3% 176 165 2,179 2,022 346 440 74 60
8 Moore Stephens International* 2,670 2,640 1% 180 175 1,967 2,031 523 434 54 54
9 RSM International* 2,451 2,108 16% 159 162 1,864 1,558 428 388 57 61
10 SMS Latinoamerica* 1,913 1,873 2% 167 162 1,597 1,571 149 140 48 40
11 Kreston International* 1,796 1,755 2% 129 123 1,390 1,323 277 309 68 66
12 Baker Tilly International* 1,742 1,608 8% 160 155 1,313 1,218 269 235 52 50
13 Russell Bedford International* 1,537 1,565 –2% 157 131 1,178 1,280 202 154 48 49
14 Nexia International* 1,371 1,220 12% 123 110 975 895 273 215 53 45
15 PKF International* 1,311 1,402 –6% 111 123 981 1,064 219 215 35 38
16 HLB International* 1,232 1,215 1% 118 120 933 916 181 179 45 48
17 Mazars* 905 950 –5% 27 47 763 779 115 124 20 20
18 UHY International* 882 840 5% 74 74 655 621 153 145 34 35
19 AUREN* 544 537 1% 44 43 443 432 57 62 19 18
Totals 92,218 86,439 7% 2,527 2,468 31,134 29,622 6,078 5,761 739 703
Notes: *Disclaimer = Only data from the named member firm or the exclusive member firms within a network/association is included. Data relating to correspondent and non-exclusive member firms is not included. Source: International Accounting Bulletin
16 y September 2014 www.InternationalAccountingBulletin.com International Accounting Bulletin Latin America COUNTRY survey
government in Brazil in the coming find that companies there are trying to sur- operate in the market, so despite a nervous months might bring more growth to our vive more than they are trying to grow,” market we have been able to grow.” firm,” Bunce concurs. Bunce summarises. Pestarino shares this optimism saying Despite the slowdown in the Brazilian According to him Venezuela is in an even that crises are always a source of oppor - economy Rivera at Baker Tilly says there more challenging economic situation than tunity and you can always grow in a dif- are still opportunities to be had. “Even Argentina. At Crowe Horwath Pestarino ficult market. “When you are in Europe though Brazil is a challenging environment agrees the situation in Venezuela is worse or North America and you see markets because of the current market slowdown, than in his home country Argentina. “In in Latin America with more than 40% our corporate finance practice has nearly Argentina the situation is difficult due to inflation rates and devaluations taking doubled this year,” he says. “Equally in the political situation. It’s not so much an place two or three times a year, you might Mexico the introduction of a lot of regula- economic problem,” he argues. “We’re think you can’t work in those conditions,” tory changes brings a lot of opportunities far from the situation we were in in 2001, he says. “But we can and we’re finding and we have hired top talents to stay ahead but the trend is there and the next year opportunities to help our clients. We can of these changes.” will be difficult.” offer quality services adapted to the needs of The situation results in delays in pay - the market at a particular moment and do Challenging territories ments and the recovery of accounts received well as we try to overcome the difficulties.” Asked which countries are the most chal - is getting slower, Pestarino says. Ultimately lenging in the region, interviewed firm lead- companies are unwilling to invest and this Uruguay and Paraguay ers all point to Argentina, Venezuela and, impacts the economy even more, he argues. Benefiting from Argentina’s misfortunes, to a lesser extent, Ecuador. They highlight “Our clients are a bit nervous, especially Uruguay and Paraguay have gained more the economic difficulties those countries are the international ones, about how to repat- importance in recent years. And most sur- facing which have sometimes led to politi- riate funds and about their continued profit- veyed firms have enjoyed strong growth cal instabilities. ability in the country,” Rivera says. “But it in both countries. Pestarino explains that “Argentina and Venezuela are in a dif- has provided us an opportunity in helping Uruguay and Paraguay took advantage ficult economic situation with very high our clients in assessing the situation and of the difficulties of their neighbour by inflation, chaotic exchange rates and you understanding how they can continue to passing measures to encourage invest -
n Latin America Associations – staff data
Total staff Growth Partners Professional staff Administrative staff Offices Rank Name 2013 2012 rate 2013 2012 2013 2012 2013 2012 2013 2012 1 UC&CS GLOBAL* 1,676 2,168 -23% 215 164 1,202 1,614 259 390 113 144
2 CPA Associates International* 1,248 1,287 -3% 126 118 912 957 210 212 49 49
3 PrimeGlobal* 1,116 1,147 -3% 114 115 774 833 228 199 58 53
4 DFK International* 1,063 843 26% 86 71 813 650 164 122 53 41
5 Praxity* 1,032 1,016 2% 37 41 865 830 130 145 31 29
6 MGI* 963 757 27% 106 80 595 432 262 245 38 38
7 ANTEA* 958 808 19% 92 79 760 631 106 98 49 45
8 Morison International* 580 520 12% 65 58 405 364 110 106 23 24
9 BKR International* 578 578 0% 55 55 500 500 23 23 28 28
10 GMN International* 546 520 5% 55 46 420 409 71 65 27 24
11 MSI Global Alliance* 482 688 -30% 41 43 325 499 116 146 13 14
12 KS International* 445 448 -1% 27 31 344 336 74 81 25 24
13 Integra International* 419 449 -7% 43 44 322 325 54 80 25 22
14 IAPA* 373 374 0% 40 41 189 194 144 139 16 15
15 Abacus Worldwide* 205 179 15% 30 24 106 109 69 46 8 8
16 EuraAudit International* 186 174 7% 34 32 127 118 25 24 16 15
17 INPACT* 125 171 -27% 20 24 93 129 12 18 9 11
Totals 11,995 12,127 -1% 1,186 1,066 8,752 8,930 2,057 2,139 581 584
Notes: *Disclaimer = Only data from the named member firm or the exclusive member firms within a network/association is included. Data relating to correspondent and non-exclusive member firms is not included. Source: International Accounting Bulletin
www.InternationalAccountingBulletin.com September 2014 y 17 COUNTRY survey Latin America International Accounting Bulletin
■■ Latin America
Firm movements
NETWORK/ASSOCIATION FIRM ADDITIONS, MERGERS & ACQUISITIONS
ANTEA Added: KPI (La Paz, Bolivia); FSA Network (Rio de Janeiro, Brazil); HKT (Sao Paulo, Brazil); Barrios & Asociados; Maracaibo (Ecuador)
Baker Tilly International Lost: Alonso Meza (Paraguay)
BDO Merger: VA Barnwell & Associates (St Vincent and the Grenadines) merged with BDO Eastern Caribbean-St Vincent (Kingstown)
Added: Anguilla, St Kitts & Nevis, Montserrat: BDO LLC (formerly KPMG LLC) (Maico)
CPA Associates International Added: Orplan Auditores Independentes (Belo Horizonte, Brazil); C.P.& A. , S.C. (Monterrey, Nuevo León, México)
Lost: Protasio Guerra y Asociados (Matamoros, Tamaulipas, Mexico)
Crowe Horwath International Added: C. Descalzo y Asociados (Asuncion, Paraguay); Crowe Horwath Nicaragua (Managua, Nicaragua); Stavros Moyal y Asociados (Montevideo, Uruguay)
DFK International Added: LPG (Puerto Rico); Strategies & Solutions (Quito, Ecuador); Krypton Serviços Contábeis (Belo Horizonte, Brazil)
EuraAudit International Added: Globus services (Panama)
Grant Thornton International Merger: HLB FAST & ABS Auditores y Consultores, Ex Baker Tilly Alonso Meza, S.s.
Added: Bareto & Associates (Dominican Republic), PwC’s Eastern Caribbean Group
HLB International Added: Penalosa Auditores & Asociados (Colombia); Parissi CPA (Puerto Rico)
Lost: HLB Fortin Lagos & Asociados (Honduras)
Integra International Added: Verdus Auditores (Rio de Janeiro); Salgado Contatdore (Guadalajara)
Lost: SM Asociados (Santa Dominica)
Kreston International Added: b2 finance (Brazil)
KS International Added: AG Accounting & Consulting (Panama, Republic of Panama)
Mazars Acquisition: Domínio Assessores (Brazil)
GMV Asociados (Mexicali, Mexico) became a direct Mazars office.
Moore Stephens International Limited Added: Servicios Integrales de Auditoria, S.C. (Leon, Mexico)
Morison International Added: Cañon & Cañon (Bogota, Colombia)
Lost: Hansen Holm & Co (Guayaquil, Ecuador)
MGI Added: AFE Internacional SA de CV (El Salvador); ViaConsultoria SAS (Colombia); Arguelles Auditores & Asociados SA (Colombia)
MSI Global Alliance Added: Lores Budiño y Compañia S.C. (Mexico City)
Lost: Tejeda Martinez & Asociados (Dominican Republic), Rivero Hernandez & Asociados Cont. Pub., SC (Mexico City)
PKF International Added: PKF NK Brazil
Lost: Directa Brazil
Praxity Lost: Penalosa Auditores & Asociados (Bogota, Colombia)
RSM International Added: RSM Panama (Marbella, Panama); RSM Dominica (Santo Domingo, Dominican Republic)
Lost: De Levante y Asociados (Panama City)
Russell Bedford International Added: Organización Descom (Veracruz, Mexico) and VGE Contadores y Asesores Fiscales (Cd. Juárez, Mexico)
Lost: Stavros Moyal y Asoc. (Montevideo, Uruguay)
SMS LATINOAMÉRICA Added: MG Consulting Group (Panamá); Cavazos Asesores y Consultores (Monterrey, México); Quijivix, Alonso y Asociados (Guatemala, Quetzaltenango); Nardon, Nasi y Asociados (Porto Alegre, Brazil);
Estudio Belgrano (Argentina: Corrientes, Corrientes); Estudio Ricome y Asociados (Santa Fe, Venado Tuerto); KMP Gestión (Buenos Aires, Mar del Plata)
UC&CS GLOBAL Added: Cca Continuity Auditores Independentes (Sao Paulo, Brazil); Chaverri y Compania de Centroamerica (San Josè, Costa Rica); Ramirez y asociados (Lima, Peru); Escobar Consulting & Associates (Mèxico, D. F. and Monterrey, Nùevo Leòn, Mèxico); Leix JM Actuarios Asociados Mèxico (D. F., Pèrez Colìn, Aviles, Vazquez y Asociados, Mèxico); Rubio Fernàndez y Asociados (Mèxico) Yustis Malagòn y Asociados (Mèxico)
Lost: Apaez Melchor Otero (Mèxico)
UHY International Lost: UHY Audit & Advisory Services Cía Ltda (Quito, Ecuador)
Source: International Accounting Bulletin
18 y September 2014 www.InternationalAccountingBulletin.com International Accounting Bulletin Latin America COUNTRY survey
ments and attract Argentinean investors to the major Brazilian mining company, and focus on helping our clients strategically, their countries. Eletrobras one of the leading electricity sup- helping them in services beyond traditional As a result Crowe Howarth International pliers,” he explains. “At the same time we compliance services,” he says. “For that pur- added a member firm in Uruguay where didn’t lose any existing clients and that’s the pose the network will invest to develop its they were not present before. “Uruguay and reason we’re growing in audit.” internal audit and tax advisory service lines Paraguay were mainly served from Argen- Bunce believes audit is in a better posi- for clients developing a regional strategy.” tina,” Pestarino explains. tion in Latin America than in Europe or the As the regional integration continues In terms of services lines, interviewed US. Because the economy is growing and in 2015, Payette predicts “a significant firm leaders say their respective firms have companies are getting bigger, he believes consolidation in the market as clients performed well across the board, even if the the opportunities in audit will only increase. will be looking for businesses that have a traditional services (audit and tax) are fac- “But also audit is a product that has some- greater insight in the sector of activity in ing increased challenges. where to go in terms of market demand in which they operate”. “There’s no difference from the rest of the Latin America,” he adds, referring to the Quirk at RSM believes the consolidation world,” Pestarino says. “With an increase fact that still very few companies in the will mainly impact the small local account- in regulation and fierce competition in the region are required by law to undergo an ing firms which are not part of international fees, it’s sometimes difficult to combine the audit. “So we still look at audit as a growth networks or associations. “As the region decreasing fees with the increased costs of business in this part of the world.” gets more globally integrated the consoli- compliance due to regulatory changes.” Most interviewed firm leaders believe dation in the lower tier of accounting firms that at the moment and in the coming years will be driven by the demands of companies Fee pressure most of the opportunities for their firms in advanced technology as well as increased Rivera says that despite gaining new clients will be in advisory. regulation and oversight,” he says. and increasing the number of engagements, “There’s a temporary shift towards advi- Baker Tilly International has experienced a sory because the local economies are catch- Bright years ahead slight decrease in audit due to fee pressure. ing up with the demands of the global econ- All interviewed firm leaders agree that their “Because of tough competition in the mar- omy and of the multinational companies,” organisations face bright years ahead in the ketplace, our clients are seeing an opportu- Quirk at RSM explains. “The growing region as all the economic indicators are nity to ask for reduced fees in the bidding small and medium businesses are in need positive for the short and medium term. process,” he explains. of upgrades in terms of policies and how to “The region will continue to grow,” Rivera also points at the way audit is per- keep up with global trends and topics such Rivera summarises. “And it is shifting to ceived in the region as a challenge for firms. as IFRS implementation.” a domestic-driven growth rather than the “Accounting regulations and information Payette says advisory already accounts for commodity and export growth that they traditionally have been linked with compli- 26% of BDO’s revenues in Latin America. have seen in the last decade.” ance for tax purposes and therefore there’s a “We concentrate our efforts on a certain While Europe and North America con- tick-off, checklist approach,” he says. number of services which are core issues to tinue to struggle to reach a stable level of “But in the last five years, as Latin the economic and financial life of our cli- economic recovery, the constant growth in American markets connect to the global ents, like outsourcing, corporate finance Latin America will certainly attract more economy and there’s a convergence towards and transaction, financial risk manage - Western investors and multinationals in the international standards, accounting infor- ment, and technology advisory,” he says. future, a sort of modern day gold rush. mation became more useful to investors Pestarino explains that the services in The Americas have gone through quite a and managers rather than the compliance demand vary according to the needs of indi- few gold rushes since Columbus set foot in approach,” he continues. vidual countries. this part of the world in 1492. Few of those Payette at BDO agrees: “The big trend “But the most demanded ones have to gold rushes have benefited the region, espe- in audit is more demand to ensure that the do with risk: internal audit, anti-money cially in South America, as John Steinbeck value of the audit is enhanced, to get great- laundering, governance of the company,” wrote in East of Eden: “Then the hard, dry er insights on what’s happening through he says. “In countries where the economy Spaniards came exploring through, greedy assurance on non-financial information for is doing well, there are a lot of oppor - and realistic, and their greed was for gold or example. There’s also a greater responsibil- tunities in corporate finance, due dil - God. They collected souls as they collected ity on auditors for fraud detection.” igence and M&A.” jewels. They gathered mountains and val- BDO has grown in all service lines, with In other countries, Pestarino says, sus - leys, rivers and whole horizons, the way a audit and accounting making 57% of the tainability and Integrated Reporting (
www.InternationalAccountingBulletin.com September 2014 y 19 COUNTRY survey Netherlands International Accounting Bulletin
Unsettled times continue for Dutch profession Despite high-profile developments on audit reform, the shakeout of the Dutch accounting profession is far from complete. Paul Golden reports
egislators and industry associations “This autumn the ministry will evaluate the ■■ Netherlands continue to explore changes to the implementation of the EU 8th Directive and accounting industry in the Nether- a study is being undertaken on the effec- At a glance lands. The amendments to the audit tiveness of the regulations. In addition, the revenue L AFM is expected to publish its inspection process that kicked in last year and new ethics and independence requirements have reports on the Big Four.” Most revenue: PwC, €663.8m formed part of a broader discussion of the Verkade warns that if the Ministry of Least revenue: EuraAudit Int., €1.7m future of the accounting profession. Finance considers the steps proposed by the Highest growth: Crowe Horwath, 375% The next milestone in this process is the profession to restore confidence to be inade- Lowest growth: Kreston Int, –21% publication of the Future Accountant Occu- quate or insufficient, additional regulations pation Group’s report, expected in late Sep- will be imposed. staff tember. The Future Accountant Occupa- Kees Teeuwissen, chairman of Kreston Largest workforce: Deloitte, 4,341 tion Group is a working group comprised International member firm Lentink Audit Smallest workforce: KS International, 20 of firms and accountants which has, over agrees with this assessment. “Parliament Most partners: PwC, 261 the past few months, held debates and dis- has promised that if sufficient steps are Most offices: BKR International, 71 cussions with various industry stakeholders. not taken it could decide, for example, to The objective of this group is to help appoint auditors as a kind of civil servant economic indicators inform proposals that will improve the with limitations on income and the type of National GDP: €608.6bn quality and independence of the services work that could be done. It also proposed National GDP growth: –0.5% delivered by the accounting profession. The stronger governance by appointing a non- GDP per capita (PPP): $42,493 public debate that will follow the publica- audit professional as the management part- Inflation (CPI): 2.8% tion of the report is likely to be quite lively ner and appointing a supervisory board to 8.7% of GDP according to Ted Verkade, a managing audit firms exceeding a certain size.” Current account balance: 6.2% director of Baker Tilly Berk, who refers to a The debate on the position of the audi- Unemployment rate: lack of trust in the accounting profession in tor in society could lead to a discussion on Population: 16.8m the Netherlands following the credit crunch whether the audit profession should become IAB survery indicators that has been fuelled by criticism from a government service, adds Marcel Welsink, the country’s Authority for the Financial a partner at Grant Thornton Netherlands. Revenue per employee: €132,604 Markets (AFM). “This would involve questions such as ‘who Staff density: 1 accountant per 602 ppl “There is severe political pressure on should appoint the auditor?’ and ‘what Notes: Totals apply to IAB surveyed data only. This includes the profession, which has been urged by should be the charge for the services provid- firms that belong to global networks and associations. the Ministry of Finance to take credible ed?’ and could result in a major change in Source: International Accounting Bulletin, IMF steps to restore confidence,” says Verkade. the business model of the audit profession.”
20 y September 2014 www.InternationalAccountingBulletin.com International Accounting Bulletin Netherlands COUNTRY survey
Jean Bloemers, member of the board of pliance accounting services such as audit, and requests for delivery of annual accounts directors at HLB Van Daal & Partners says accounting, bookkeeping and payroll, while shortly after year-end impacts the low sea- there are a number of other issues affecting companies demanded more transparency on son especially.” the sector. fee structures from audit firms,” explains He believes the drop in revenue for tra- “One of these issues is the interpretation Johan Daams, managing partner at Crowe ditional accounting services is not yet of ‘going concern’,” says Bloemers. The pub- Horwath Foederer. fully offset by expansion of other revenue lic and the regulator do not interpret this as The result was (and is) pressure on fees streams, such as advisory services, at least accounting firms traditionally do – the pub- with rates decreasing. “Over the last five not in small firms or the smaller mid-sized lic sees auditors’ opinion as a guarantee for years the accounting market has contracted firms, but also refers to increased requests the going concern of at least a year; auditors – in 2013 it shrank by around 2% and a for audit tenders, usually from companies see it as an assumption for drawing up the further 1% decline is expected in 2014,” with a Big Four office as incumbent auditor. figures. Auditors need to adjust to this new adds Daams. “Although there is an increas- environment.” ing demand for advisory services; it’s not Client demand Other issues include client acceptance enough to compensate for the loss of volume According to Sander Brouwer, a partner at procedures (which are becoming ever- in compliance services.” Morison International member firm DHW stricter) and fraud, he continues. “The pub- These figures tally with the view of Roger International, customers are looking for lic expects auditors to detect fraud, but in Kalberg, auditor at MSI Global Alliance more real time management information. our audit procedures we only focus on lim- member firm deWaardKramer, who says IT He says fee pressure has eased as clients ited kinds of fraud and only if they are of has made accounting even more of a com- appreciate what they have to pay for ser- substantial scale. For example, conspiracy modity from a client point of view. Kalberg vices and the economy begins to stabilise. is excluded. The public does not accept this says: “Pressure on efficiency and client “Our role is becoming more advisory and we need to understand this.” requirements for on-demand and often cus- than looking at last year’s figures and cli- In the meantime, accounting firms are tomised information means firms need to ents are prepared to pay for good advice,” grappling with a still-sluggish economy invest heavily in IT and training, leading to Brouwer says. “They can see an end to the and ongoing fee pressure. “After the audit lower profit margins and revenue erosion. economic downturn, so we expect to see market was regulated, we entered a reces- An increase in ad hoc assignments (often growth in advisory services this year.” sion that decreased the demand for com- because of demand from credit institutions) Fellow Morison International member
■■ Netherlands networks – fee data Fee split (%)
Corporate Fee income Growth Audit & Tax Management Corporate recovery/ Litigation Rank Name (€m) rate Accounting services consulting finance Insolvency support Other Year-end 1 PwC* 663.8 –4% 45 34 21 - - - - Jun-13 2 EY* 634.9 1% 43 35 19 - - - 3 Jun-13 3 Deloitte* 631.0 –1% 44 26 23 - - - 7 May-13 4 KPMG* 471.1 –6% 54 44 - - - - 3 Sep-13 5 BDO* 229.9 8% 67 27 2 1 - - 3 Dec-13 6 Moore Stephens International* 106.3 –4% 72 17 - 2 - - 9 Dec-13 7 Baker Tilly International* 83.2 –3% 63 27 6 2 - - 2 Dec-13 8 Nexia International* 74.7 –2% 65 18 8 1 - 3 5 Jun-13 9 Mazars* 72.1 0% 72 26 2 - - - - Aug-13 10 Grant Thornton International* 51.0 1% 61 26 - 7 1 - 5 Dec-13 11 RSM Netherlands* 40.3 –4% 55 41 - - - - 4 Dec-13 12 Crowe Horwath International 37.1 375% 46 14 12 1 - - 27 Dec-13 13 HLB International* 35.5 –6% 54 22 13 1 - - 10 Dec-13 14 Kreston International* 33.1 –21% 58 21 6 3 2 - 10 Oct-13 15 ECOVIS International* 20.0 11% 67 19 6 3 - 5 - Dec-13 16 PKF International* 19.5 –4% 47 40 - - - - 13 Dec-13 17 AUREN* 7.1 8% 67 14 9 5 3 - 2 Dec-13 Total revenue/growth 3,210.6 –1%
Notes: *Disclaimer = Only data from the named member firm or the exclusive member firms within a network/association is included. Data relating to correspondent and non-exclusive member firms is not included. Source: International Accounting Bulletin
www.InternationalAccountingBulletin.com September 2014 y 21 COUNTRY survey Netherlands International Accounting Bulletin
firm Hoek en Blok partner Kemal Acar throughout the whole organisation will be companies, which requires industry-specific expects the weak Dutch economy to affect crucial in the near future.” knowledge, adds Daams at Crowe Horwath the profession throughout 2014, although At Baker Tilly Berk, Verkade refers to Foederer. “Services such as IT and HR are he suggests that most of the pain will be felt an industry in transition. “With regard to increasingly important, next to corporate by the largest firms. audit we’re facing heavy regulatory pres- finance and mergers and acquisition work. Diana Clement, a partner at Alliott sure and tightened independence require- Competition varies depending on the com- Group member firm Borrie also sees oppor- ments,” he says. “Traditional services such plexity of the work – accounting firms that tunities for mid-sized firms in the division as compilation and tax return preparation demonstrate above-average knowledge of of audit and advisory services, observing are declining due to advanced IT solutions, an industry and/or show specific technical that rotation has led to more attention standardisation and administrative burden skills will stand out from those that rely on on quality and the input of the lead audit relief and the economic decline of recent compliance services.” partner. years has heightened competition, creating So far, the large and mid-size firms seem Despite the fact that rates are under significant fee pressure.” to be the ones that are able to invest in these pressure, it’s still possible to make good He says his firm has experienced increased service lines and knowledge, Daams contin- margins, says Edzo van den Berg, part - demand for tax advisory services, par - ues. “Success between those firms is deter- ner at MGI member firm Verstegen. “The ticularly indirect tax, transfer pricing and mined by being able to hire the right staff industry is exploring the possibilities to international tax advice. “Another notable for the job. The ability to attract quality expand and deepen the advisory function. growth area is IT consulting, including staff will be a major issue in the near future At the same time it’s essential to increase cyber security. Competition generally is – an interesting fact is that a few firms have efficiency regarding basic processes such as fierce as all firms are shifting their focus to begun hiring lawyers or making acquisi- administration and the preparation of doc- those value-added services. M&A activity is tions that relate to legal services.” uments such as financial statements and tax well below the normal level. We have expe- In June, Crowe Horwath Foederer returns.” rienced several occasions where acquisition acquired Amsterdam-based De Keijzer In the Netherlands there’s a need for high- candidates have unrealistic expectations Nipius & Co. The merged entity has 350 quality consultancy regarding financial and about price – once they are back with their employees in the Netherlands. tax issues, he continues. “Financial and feet on the ground they decide to wait for Daams is cautiously optimistic that tax regulation becomes more and more better times.” the Dutch economy will improve in the complex, which increases the potential The markets demand that the accounting medium to long term and expects the vol- risks for entrepreneurs. Consultancy skills industry plays a role as a strategic advisor to ume in accounting services to be affected
■■ Netherlands ASSOCIATIONS – fee data
Fee split (%)
Corporate Fee income Growth Audit & Tax Management Corporate recovery/ Litigation Rank (€m) rate Accounting services consulting finance Insolvency support Other Year-end 1 BKR International* 158.6 0% ------Dec-13 2 CPA Associates International* 115.2 –3% 56.9 24.7 4.7 1.7 - 0.4 11.6 Dec-13 3 Praxity* 72.1 0% 72 26 2 - - - - Aug-13 4 PrimeGlobal* 56.8 –4% 59 22 6 2 - - 11 May-14 5 MGI 24.6 66% ------Jun-13
6 Morison International* 20.0 2% 55 14 4 5 2 4 16 Dec-13 7 MSI Global Alliance 12.3 –9% 67 20 12 - - - 1 Dec-13 8 Alliott Group* 10.4 –13% 55 30 11 2 - 1 1 Dec-13 9 Antea* 8.7 7% 70 15 8 4 2 - 1 Dec-13 10 Integra International* 5.7 –15% 50 35 15 - - - - Mar-14 11 INPACT International* 3.7 –9% 70 18 12 - - - - Dec-13 12 GMN International* 2.5 –3% 60 21 13 - - 6 - Dec-13 13 Abacus Worldwide* 2.1 6% 30 33 5 - 14 - 18 Dec-13 14 KS International* 1.8 3% 45 30 15 10 - - - Dec-13 15 EuraAudit International* 1.7 6% 6 44 - - - - 50 Dec-13
Total revenue/growth 496.2 0%
Notes:. *Disclaimer = Only data from the named member firm or the exclusive member firms within a network/association is included. Data relating to correspondent and non-exclusive member firms is not included. Source: International Accounting Bulletin.
22 y September 2014 www.InternationalAccountingBulletin.com International Accounting Bulletin Netherlands COUNTRY survey
n Netherlands NETWORKS – staff data
Total staff Growth Partners Professional staff Administrative staff Offices Rank Name 2013 2012 rate 2013 2012 2013 2012 2013 2012 2013 2012 1 Deloitte* 4,341 4,475 –3% 242 246 3,230 3,340 869 889 21 21
2 PwC* 4,292 4,462 –4% 261 268 3,180 3,323 851 872 12 12
3 EY* 3,625 3,811 –5% 226 232 2,654 2,748 745 831 15 15
4 KPMG* 3,131 3,227 –3% 167 184 2,339 2,429 625 664 10 11
5 BDO* 2,093 1,964 7% 82 74 1,583 1,481 428 409 29 27
6 Moore Stephens International* 1,025 1,060 –3% 70 63 824 871 131 126 30 31
7 Nexia International* 765 739 4% 59 56 573 550 133 133 20 20
8 Mazars* 679 689 –1% 49 51 473 479 157 159 10 11
9 Baker Tilly International* 642 674 –5% 45 44 486 513 111 117 18 18
10 Grant Thornton International* 470 522 –10% 48 50 320 361 102 111 9 8
11 Crowe Horwath International* 377 93 305% 34 6 320 77 23 10 13 3
12 HLB International* 374 349 7% 33 33 305 241 36 75 17 15
13 RSM Netherlands* 349 425 –18% 30 30 251 335 68 60 10 10
14 Kreston International* 304 852 –64% 27 68 225 606 52 178 10 25
15 ECOVIS International* 209 202 3% 17 18 158 150 34 34 12 10
16 PKF International* 157 157 0% 20 18 125 127 12 12 4 4
17 AUREN* 76 82 –7% 4 3 66 69 6 10 2 1
Totals 22,909 23,783 –4% 1,414 1,444 17,112 17,700 4,383 4,690 242 242
Notes: *Disclaimer = Only data from the named member firm or the exclusive member firms within a network/association is included. Data relating to correspondent and non-exclusive member firms is not included. Source: International Accounting Bulletin
n Netherlands Associations – staff data
Total staff Growth Partners Professional staff Administrative staff Offices Rank Name 2013 2012 rate 2013 2012 2013 2012 2013 2012 2013 2012 1 BKR International* 1,598 1,675 –5% 2 2 1,596 1,673 - - 71 71
2 CPA Associates International Inc. 1,270 1,276 0% 64 63 1,099 1,095 107 118 44 48
3 Praxity* 679 689 –1% 49 51 473 479 157 159 10 11
4 PrimeGlobal* 625 611 2% 47 54 499 447 79 110 17 18
5 Morison International* 214 208 3% 28 29 163 164 23 15 6 7
6 MGI* 182 120 52% 16 10 79 25 87 85 11 2
7 MSI Global Alliance* 124 143 –13% 16 18 94 109 14 16 2 2
8 Antea* 90 96 –6% 6 5 77 80 7 11 3 2
9 Alliott Group* 78 93 –16% 9 10 56 67 13 16 2 3
10 Integra International* 47 51 –8% 8 8 33 37 6 6 1 1
11 INPACT International* 44 53 –17% 5 5 33 38 6 10 2 2
12 GMN International* 29 31 –6% 3 3 20 22 6 6 1 1
13 Abacus Worldwide* 23 22 5% 2 2 18 18 3 2 1 1
14 EuraAudit International* 22 14 57% 3 1 16 10 3 3 2 1
15 KS International* 20 19 5% 4 4 15 14 1 1 2 2
Totals 5,045 5,101 –1% 262 265 4,271 4,278 512 558 175 172
Notes: *Disclaimer = Only data from the named member firm or the exclusive member firms within a network/association is included. Data relating to correspondent and non-exclusive member firms is not included Source: International Accounting Bulletin
www.InternationalAccountingBulletin.com September 2014 y 23 COUNTRY survey Netherlands International Accounting Bulletin
Connect to Wealth Through Intelligence
■■ Netherlands
Firm movements Editor: Ana Gyorkos NETWORK/ASSOCIATION FIRM ADDITIONS, MERGERS & ACQUISITIONS Tel: +44 (0)20 7406 6707 Email: [email protected] AUREN Merger: Square Accountants (Amsterdam) Deputy Editor/Editor of The Accountant: BDO Acquired: HLB Schippers (Alkmaar, Amersfoort, Amsterdam, Den Helder) Carlos Martin Tornero Tel: +44 (0)20 7406 6706 Crowe Horwath International Added: Accountantskantoor Foederer B.V. (Eindhoven) Email: [email protected]
DFK International Lost: Accountantskantoor Foederer B.V. (Eindhoven) Reporter: Isabella Grotto ECOVIS International Added: Avant Accountants (Oudewater) Tel: +44 (0)20 7406 6704 Email: [email protected] EuraAudit International Added: IUS Statutory Audits (Amsterdam) Reporter: Vincent Huck Grant Thornton International Merger: ConQuaestor (Utrecht) Tel: +44 (0)20 7406 6709 Email: [email protected] HLB International M&A: HLB Kallen Raeven (Geleen), Kompaan Accountants (Veghel), HLB Van Daal & Partners (Breda, Den Bosch, Dongen, Gemert, Oss, Schijndel, Tilburg, Uden, Veghel, Group Publisher: Ameet Phadnis Waalwijk) Tel: +44 (0)207 406 6561 Email: [email protected] Kreston International Lost: BOL Accountants (Boxmeer), Van Oers Accountants (Breda), BAAT (Heerlen) Contributors: Paul Golden; Steffen Muller MGI Added: B&P Accountants (Amsterdam) Chief Subeditor: Nick Midgley Subeditor: Kev Walsh by continuous development in automation, rapidly. Firms ready for this change will Subscription Enquiries: Sharon Howley digitalisation and standardisation. grow; others will shrink.” Tel: +44 (0)20 7406 6615 “Compliance services will be most affected In the Netherlands there’s a general opinion Email: [email protected] and advisory services will become increas- that the accountancy profession has partly Director of Events: Ray Giddings Tel: +44 (0) 203 096 2585 ingly important. Companies will seek firms lost its standing through some unfortunate Email: [email protected] that are able to provide compliance services in developments with some Big Four firms both
a very effective and efficient manner and com- abroad and in the Netherlands, as well as by Sales Executive: Alex Aubrey bine these with high-quality advisory services the conclusions of the AFM with respect to the Tel: +44 (0) 203 096 2603 Email: [email protected] for an acceptable fee. In the case of statutory quality of audit, says Kreston’s Teeuwissen. Customer Services: audits, the market needs to determine how “We expect accounting firm fees to con- Tel: +44 (0)20 3096 2636 or +44 (0)20 3096 2622 to provide these services while meeting inde- tinue to fall, mostly caused by the public Email: [email protected] pendence requirements.” positioning of auditors as less trustworthy, For more information on Timetric, visit our website at vrl.timetric.com less excellent and too profitable,” he says. For more information on accessing Sparring partners “Increasing impact of IT on our services International Accounting Bulletin content online, including a five-year archive, please According to Morison’s Acar there’s been a will cause a shakeout among smaller firms telephone +44 (0)20 406 6579 or email sizeable increase in the number of companies and provide chances for mid-sized firms to [email protected] looking for a ‘sparring partner’ on topics such introduce new kinds of services, such as con- London Office as tax, legal, finance, internal control, takeo- tinuous monitoring and business intelligence 5th Floor, Farringdon Place, ver, financial planning, prospective informa- services. We also expect IT audit activity to 20 Farringdon Road, tion and reporting, although Kalberg at MSI increase as part of audit services.” London, EC1M 3AP Global Alliance accepts that non-accounting In the statutory audit market there remains Asia Office 20 Maxwell Road firms also have considerable experience in a demand for services, says Welsink at Grant #04-02J, Maxwell House About WealthInsight handling these types of requests. Thornton. “In the market for public interest Singapore 069113 Tel: +65 6383 4688 At HLB Van Daal & Partners, Bloemers companies, competition is still too limited Fax: +65 6383 5433 WealthInsight provides detailed data and insightful analysis on We work with and provide solutions for: also uses the word “transition” to describe and mainly concentrated within the Big Four. Email: [email protected] the world’s High Net Worth Individuals (HNWIs) and wealth Wealth Managers the state of the accounting industry in the In other services like tax, outsourcing and Financial News Publishing Ltd, 2013 sector. With decades of experience providing business Netherlands. “International services regard- advisory there’s more competition. In the ser- Registered in the UK No 6931627 Private Banks ISSN 0265-0223 information, WealthInsight helps organisations make informed ing tax advice and payroll, as well as interna- vice industry growth is still negative and we Unauthorised photocopying is illegal. The contents Family Offices of this publication, either in whole or part, may not decisions and win new business. tional audits are in high demand and there are are not expecting that this will change in the be reproduced, stored in a data retrieval system Technology Providers or transmitted by any form or means, electronic, only a few networks that can really provide near future.” mechanical, photocopying, recording or otherwise, Professional Services – Consultants, Accountants, without the prior permission of the publishers. At WealthInsight’s core is our proprietary HNWI these services to a high standard,” he says. As a member of a mid-tier firm Welsink Lawyers, Real Estate Professionals “We’re optimistic about future economic anticipates that in the longer run he will see Database of the world’s wealthiest individuals. Around Fund Managers, Asset Managers, prospects, but that situation might change if more results from the current legislation on this database we have built a number of valuable research Venture Capitalists the issues in Eastern Europe are not solved audit rotation and non-audit services. “We based products and services that make WealthInsight much Non-profits and Educational Institutions in a diplomatic way. The size of the market expect that for non-audit services the market more than just a rich contact list. for accounting services will not grow, but will change more rapidly than for audit ser- there will be movement between services. We vices,” he concludes. “Therefore we believe expect services related to IT – for example, that most growth will come from advisory data mining and online services – to grow services.” < For more information contact us at [email protected] T: +44 (0)207 406 6553 24 y September 2014 www.InternationalAccountingBulletin.com Connect to Wealth Through Intelligence
About WealthInsight WealthInsight provides detailed data and insightful analysis on We work with and provide solutions for: the world’s High Net Worth Individuals (HNWIs) and wealth Wealth Managers sector. With decades of experience providing business Private Banks information, WealthInsight helps organisations make informed Family Offices decisions and win new business. Technology Providers Professional Services – Consultants, Accountants, At WealthInsight’s core is our proprietary HNWI Lawyers, Real Estate Professionals Database of the world’s wealthiest individuals. Around Fund Managers, Asset Managers, this database we have built a number of valuable research Venture Capitalists based products and services that make WealthInsight much Non-profits and Educational Institutions more than just a rich contact list.
For more information contact us at [email protected] T: +44 (0)207 406 6553 International Accounting Intelligence
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