• Register
Return to: Home > Comments > Editor's comment: Advice versus assurance

Editor's comment: Advice versus assurance

BearingPoint, EquaTerra, PTRM, Drivers Jonas, Übermind and Optimum Solutions are just some of the advisory businesses acquired by the four global accounting giants in recent years. To add to the list, PwC announced in October it is in discussions to acquire global consultancy Booz & Company, which would add around $1.4bn to the firm's annual advisory revenues.

Hopes of strong, maybe even double-digit organic growth appear to have been swept away with more pragmatic business views in recent years.

The Big Four appear to be more or less fearless of the effects advisory acquisitions might have on their business models despite, only a decade ago, the Sarbanes-Oxley regulation leading to a mass disposal of advisory capabilities of three of the Big Four firms. Since then, all firms have to some extent rebuilt their advisory capabilities or strengthened what was left of the old ones, but debates about whether to restrict the offering of non-audit services by audit firms are still very much active.

The EU is currently discussing such measures and potentially creating an additional 'blacklist of non-audit services' and several countries around the world have raised the issue and questioned the potential conflict of interest that could arise with providing advice to an audit client.

Despite such concerns, advisory has almost started to overtake assurance revenues in many Big Four firms. Globally, Deloitte is currently the only firm with higher advisory revenues than assurance, but in Australia, for example, PwC's and EY's assurance revenues only account for 31% and 35% of overall revenues respectively. The Big Four also vigorously argue that non-audit services and having a board skill set at the firm only strengthens the quality of audit and the standard of service they provide. ~

An increase in advisory investment at the Big Four is a likely response to the slowdown in growth, audit fee pressure and an increase in regulatory compliance, which seems to have halted audit services growth around the world.

The culture of 'more for less' has become the mantra in many countries and it appears firms are increasingly resorting to advisory work for those much-needed fees to support growth at their large international business. Advisory investments are deemed to be worth the risk for firm leaders as regulation in the market is far from decided.

Top Content

    Time pressure: Facing up to mental health

    In an ‘always on’ culture, it is becoming increasingly difficult to manage a healthy work-life balance. While companies are beginning to address this problem by introducing different support systems, Joe Pickard finds more could be done to ensure the wellbeing of the professions workforce.

    read more

    Venezuela: the race for the dollar

    With a new currency following hyperinflation, large sections of the population emigrating to neighbouring countries, an economy on the brink of collapse and no apparent solution coming from the government, Jonathan Minter finds a profession struggling to stay afloat in Venezuela.

    read more

    Brazil: transparency and control

    Brazilian accountants have an optimistic view of the impact of more-regular reporting and the implications of audit controversies for the profession. Paul Golden reports.

    read more

    Argentina: looking for a clearer view

    The Argentine accounting profession continues to grapple with the impacts of a weak economy and a culture of financial corruption. Paul Golden takes a closer look.

    read more

    Blockchain: adapting to disruptive tech

    In the relatively few years since digital currencies first began using blockchain technology, the array of potential applications has grown significantly – and continues to expand. Dan Balla, Matthew Schell and Dave Uhryniak from Crowe look at how it impacts accountancy.

    read more
Privacy Policy

We have updated our privacy policy. In the latest update it explains what cookies are and how we use them on our site. To learn more about cookies and their benefits, please view our privacy policy. Please be aware that parts of this site will not function correctly if you disable cookies. By continuing to use this site, you consent to our use of cookies in accordance with our privacy policy unless you have disabled them.