The reporting season has started, and the news is positive so far for the Big Four – Deloitte increased revenues by 8.6% globally, while PwC’s UK firm reported a 7% increase in fee income.
This indicates we might see another close race for the title of world’s largest professional services firm, and almost makes it feel as if growth is back to pre-economic downturn levels.
What’s more, it’s not only Deloitte and PwC doing well; most firm leaders around the world I have spoken to tell me their firms are doing well despite the downturn.
Nevertheless, I’m also hearing a serious lack of optimism regarding the future. Perhaps it is the huge weight of pending regulatory change, the increased level of legal risk, or just the seemingly endless economic instability. There is still no end in sight to the downturn, and despite accounting firms managing well by offering services such as administration and recovery (not to mention helping their clients comply with their own regulatory demands), it’s no substitute for working in a healthy market.
For example, French firms surveyed by International Accounting Bulletin had an average growth of 4% in 2011 (see pages 16-20) – holding their own, given the economic environment, but nothing spectacular, and with little sign of things improving in the next year. Nevertheless, firm leaders in France are keeping their cool about the future, and there is clearly a “survival mode” feeling in place.
Firms are increasingly reviewing their efficiency, looking for M&A opportunities and ensuring they develop and invest in the right service lines. There is a great awareness that a strategic mistake could cost firms dearly. Even across Latin America – an undeniable growth market – staff numbers only increased by an average 7%, while revenues grew 16%, indicating that efficiency is a major priority.
Returning to the subject of increased regulatory demands, the long-awaited European Parliament legal affairs committee (Juri) draft legislation report has finally seen the light of day. There is extensive coverage of industry feedback on the report in this month’s issue (see pages 8-9) and although most market-changing reforms have been excluded from the document, the process is far from over. There has been a lot of misleading reporting from the media regarding the document – who could blame them, it is a complicated process even for a specialist title – but it is important to remember we are far from the stage where member state governments will give their views on the reforms.
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By GlobalDataCurrently the draft lies with Juri committee MEPs, who are representing their European political parties and constituencies rather than member state governments. Juri members are set to submit their views by 7 November, and by then, the European Parliament’s economic affairs committee (Econ) is expected to have given its draft report as well.
However, with the economic situation in mind, Econ might have a few other, more urgent, matters to clear before tackling the audit market. It is only towards the end of the year or early next year when a joint text from all the committees is expected to reach the Parliament and all MEPs.
Nominations now open
Last year’s inaugural IAB awards were a great success, topped with a great evening of networking and celebration. Nominations for the 2013 IAB Awards have now opened and I would like to invite you all to nominate your global organisation, member firms, service lines or individuals, across 14 categories.
The Awards will be held on 14 March 2013 in London.
Additionally, I would like to point your attention to the new comment section in IAB on page 4.
If you would like to comment on any of the events in the industry and challenges you might be facing, we would like to hear from you.
Ana Gyorkos
ana.gyorkos@vrlfinancialnews.com
