Transcript Around the World in 60 Minutes
IAB key trends, rankings and research in 2013 Ana Gyorkos, Editor For BKR International, Dublin
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A brief introduction…
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Running order
• •
Global analysis of network and association performance in 2012 – sneak peek for 2013
•
Key global trends (M&A, service lines etc.) Regional trends
•
Special analysis: China and Africa
•
Where does BKR International stand?
•
What does the future holds?
•
Q&A www.internationalaccountingbulletin.com
2012 – faltering growth
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Facts & Figures
45
surveyed networks/associations
22
Networks
23
Associations
$165.4bn
overall market fee income Networks have
88%
market share globally Big Four have
67%
market share globally
48%
of overall fees earned are from Audit & Accounting services
23%
from Tax
29%
from advisory services
23%
networks/associations reported a decrease in annual fee income
11%
networks/associations reported double digit growth
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M&A – from prediction to reality
As growth stalls in developed markets, M&A presents an opportunity for growth PKF International hit most in 2012 as BDO International firms merge with its Australia, UK and part of China operations Large single firms in the US merging: LarsonAllen and Clifton Gunderson, JH Cohen and Reznick Group Big Four focusing on advisory acquisition especially in the IT and analytics sector Not many Big Four firm takeovers in 2012 Large scale M&A expected to increase into 2013 Firm leaders engaged in increasing number of discussions regarding potential M&A activity
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Networks
Networks 6% to $145bn
Grant Thornton International
overtakes RSM as 6 th largest network, leading by $194.2m Nexia International claims back place of 10 th largest network by overtaking PKF International Top 10 networks fee income 6.5% in fy12; in fy11 up 8%
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Associations
Associations - growth flat Total fee income $20.3bn No change in the top 10 ranking IGAF Polaris rebrands as PrimeGlobal Top 10 associations fee income 0.4% in fy12; in fy11 up 7%
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World survey 2013 sneak peek
Deloitte took over PwC as largest global network – advisory services race heats up as assurance declines BDO revenues expected to increase significantly (key economies such as the UK, South Africa, China…) Decrease in revenues expected for PKF International and potential decrease for RSM Several moves between member firms – some associations seeing a decline year-on year while new ones are being set up Another year of growth expected and the increase in top 10 market share
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Audit margins decreasing – pressure to increase efficiency Fee pressure continues to rise Standard compliance – still no plan on IFRS in US and Japan
Audit: under pressure
Increasing statutory audit threshold Decrease in client loyalty Regulatory oversight
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Regions
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Growth by Country: IAB
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Big Four
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North America
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South America
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Asia-Pacific
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Europe
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Africa and Middle East
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Revenue vs. Staff
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China
• Strongest mid-tier market – Since 2013
Ruihua
the 3 rd largest firm in the market • Big Four under regulatory pressure • Significant push to develop strong domestic players, which could become large international players – by the MoF and CICPA • Shinewing and Reanda International different way of approaching international expansion • Concerns over audit quality of domestic firms as they move towards international clients. Software and quality control improvements needed
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China
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Emerging opportunities - Africa
• Why Africa?
• In 2013 IAB Africa survey a combined 25 networks (14) and associations (11) took part – combined fee income of over $2bn • • Mid-tier revenues between $1m (Key Will Group) to $108.8m (Praxity/includes Mazars) Accounting networks and associations have significantly increase their investment in the continent • Big Four looking to integrate practices • For mid-tier associations and networks difficulty to find member firms • Fears of corruption, quality and talent shortages • Countries to watch out for
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Regulation, regulation, regulation
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Regulation all around
• Regulation in the market becoming extremely fragmented, but business increasingly global • European debate awaiting trilog (Council, Commission and Parliament) – mandatory rotation an option – directive or regulation • UK Competition Commission • US congress stops PCAOB mandatory rotation debate • India Companies bill resulting in challenges and opportunities for the mid-tier
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Biggest Issue
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What the future holds
• More M&A among firms globally • Continued fee pressure though some improvements in sight • Increased expansion across regions of Africa • Increased public scrutiny of tax work • Pressure to find niche advisory work • Increased regulation compliance work • Capping staff numbers in developed markets • Being able to work truly internationally becoming an even bigger challenge due to regulation
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Thank you
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