Contributors from Brazil were asked three questions: What were the highlights/trends in your market last year? (i.e. important mergers, regulatory changes, economic situation etc.); What are the opportunities and challenges for accounting firms in the market?; What are the expectations for the future short/medium/long term?

By Cleverson Lacerda, international liaison partner, PKF Brazil

Over the past few years, in the quest for a global regulatory alignment, the Brazilian accounting and auditing environment has experienced major changes. This has created a scenario of important challenges in auditing and consulting firms’ operational methods, affecting professionals’ performance.

In a highly competitive market, the big auditing firms banded together in one single block, taking almost all of the business opportunities and forcing small- and medium-sized firms to seek alternatives to reinvent themselves and remain competitive.

Obviously, the economic and political crisis has affected important sectors such as oil and gas and civil construction, and has triggered a ripple effect in several other sectors. Consequently, auditing services have been directly affected, first of all by business stagnation, which was aggravated by the political and economic uncertainties prevailing in Brazil.

In this situation, the government has struggled to re-establish economic stability and regain investors’ and the market’s confidence in the Brazilian economy.

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Despite all these challenges, the Brazilian auditing and consulting market is one of the biggest in Latin America. This is the reason why CVM – the Brazilian counterpart of the US Securities and Exchange Commission – IBRACON, the Brazilian Independent Auditors’ Institute, and CFC, the Federal Accounting Council, have endeavoured to regulate, inspect and foster the qualification of accounting and auditing professionals in Brazil. This participation of regulatory agencies is extremely important to the training of professionals and the profession’s upgrading and strengthening.

The new auditor’s report has been the main subject of discussion at professional forums, training programs and events since its adoption on 31 December 2016. This has been with a view not only to prepare professionals but also to make administrative councils and top companies’ management aware of auditors’ work.

We believe that, given the need to meet the new market requirements regarding disclosure of information and their impact on the business environment, this effort opens up a huge opportunity for the auditing and consulting market to support organisations and their activities as they endeavour for comply with regulations.

In a challenging environment, specialisation, quality control, distinctive servicing traits and attention to clients are indispensable characteristics of auditing firms. If they are to remain relevant, they should always be offering innovative solutions and specialised services for competitive prices, high technical skills and, above all, trained professionals with strategic knowledge of their clients’ markets.

In the face of such an increasingly complex and demanding scenario, firms have only two options: continue to do more of the same, with the risk of being forgotten by the market; or position themselves as the best option, by actively participating in this ever-changing market, improving the quality of their services and their professionals’ work and, most of all, generating value for the society and clients as an active economic growth agent, through their services. There are opportunities that only a crisis environment can make us think of taking.


By Raul Corrêa da Silva, managing partner BDO Brazil

We have generating additional growth through investments in technology and people training. Our 20% percent increase in revenue is also a consequence of our most recent incorporations: we incorporated the operations of Performance, a company with a 27 years history, headquartered in the city of Salvador, State of Bahia and of JD Auditores Independentes in the city of Manaus, State of Amazonas.

Moreover, our consolidation as one of the Big 5 and as a reference of excellence in services for the middle market has also been fundamental to our sustainable growth, considering that our philosophy is in line with the growing request of the market for business partners prepared to assist in management improvement and more transparency.

In spite of our good results, it is important to talk about some of the current challenges for the industry in Brazil.

Due to the economic crisis, Brazilian companies in general are still facing a decrease in sales and are consequently dismissing many employees, i.e., are shrinking and thus reducing the fees for audit firms. Also, it has been hard to pass along at least the inflation or collective agreement costs for the existing clients to renew the proposals.  

To deal with these facts, we have been increasingly looking for electronic tools for the continuous improvement of our services quality and to make our teams more efficient, adjusting the team size without losing quality in the engagements. We have been also developing new lines of services with differentiated fee rates for some specific businesses in the middle market.

Another important challenge is that, in Brazil, there has always been a historical continuing demand for skilled professionals. In addition to this, we are now facing the era of the “Millenials” and according to the bureau of labor statistics, 40% of people in today’s workforce change jobs annually. Nevertheless, all over these years, we have developed a very well structured recruitment process and we have been investing a lot in Communication and HR, so I believe that we are very well prepared to face these challenges.      

In spite of the challenges created by our current market scenario, it is important to say that there are also opportunities generated by it. As an example, we can mention the increased demand for Forensics Services, mainly in view of the current Brazilian investigative scenario, which involves not only the governmental, but also the private corporate level. As observers of this trend, we are also investing to offer cyber security solutions.

As for the regulatory changes that will have impact in our profession, it is certainly important to talk about the new IFRS: 15 (Revenue from Contracts with Customers), 16 (Leases) and 9 (Financial Instruments). The application of these new standards will only be mandatory in Brazil as from 2018 (for IFRS 15) and 2019 (for IFRS 16 and 9).

However, it is clear that these changes will not only bring significant impact to the financial metrics of all companies that adopt these standards. They are already bringing impact to the local regulatory bodies and to the audit companies of all the countries that fully adopt IFRS, being this our case.

The Brazilian Committee of Accounting Pronouncements (“Comitê de Pronunciamentos Contábeis” – CPC) has already disclosed the standard “CPC 47”, as a “local translation” to IFRS 15 and is working on the adaptation of the other new standards (IFRS 16 and 9).  

We have strong participation in our local regulatory bodies and through our internal technical committees and trainings, our technical leaders are being prepared to these new regulatory changes.

When talking about new regulatory changes, it is also important to talk about the new auditor report, which started to be applicable in the Brazilian market as from the fiscal years ending on December 31 2016, being initially mandatory for listed and regulated companies. 

The new structure of the report, implemented by IFAC, aims to consolidate the important role of the auditor. The biggest change in our opinion, since it reflects a global trend – the increasing requirement for more transparency – is the inclusion of a section to cover the “Key Audit Matters” (KAM), as per the new ISA 701, from IFAC.

Such changes are expected to increase the level of communication of the auditor with the company’s governance responsible team.

Auditors are being increasingly observed by all market players, with an increasing level of responsibilities imputed to these professionals. As a result, the profession is becoming more and more regulated by different authorities. This is of course a great challenge, but is also a great “driving force” for the profession, since it makes mandatory for companies in the market to keep high quality standards and differentiates good market players.

With our consolidated position we have an optimistic and aggressive growth strategy, mainly focused on the advisory, tax and outsourcing areas.


By Antonio Nasi, partner SMS Brazil

The trend is the mandatory audit for companies with Revenues above R$ 300 million or Assets above R$ 240 million.

The opportunity is to offer management consulting services for the small and medium size business.

Our expectation is to substantially grow in the auditing business with new clients.


By Anna Mazur, regional administrator Juenemann & Associados Auditores Consultores (AGN member firm)

Regarding regulatory changes in the area of ??audit, there was the adoption in Brazil this year, of the new Independent Auditor's Report in line with international standards, referring to the financial statements for 2016. Among the main changes for publicly held companies is the requirement to include the Key Auditing Matters in the report, which should set out in detail the situation found in the audited company.

In terms of opportunities, there are excellent market opportunities for companies that can offer differentiated services aligned to the use of new technologies in the service of accounting. Among the challenges is the need to retain talent, maintain and encourage professional training through continuing education, preservation of ethical values, transparency, agility with information and monitoring of technological evolution.

The expectations are good for both companies and service providers, since employability in the accounting area is one of the highest in the market, in addition to the tendency areas. More than ever, professionals need to keep on constant updating.