Global chiefs cautious on
effects of credit crunch

Global accountancy leaders do not believe the credit
crunch is likely to have a drastic effect on the professional
services industry next year, although some have urged
caution.

Speaking to IAB for this year’s World Survey, partners
warned there could be a slow-down in borrowing and the economy, but
felt this would not be a major hurdle to an industry that grew by
20 percent in terms of fee income over the past year.

PricewaterhouseCoopers Global chief executive Sam DiPiazza issued
the sternest warning. As the largest Big Four network, with global
revenues of $25.2 billion and a large financial services client
base, PwC is most likely to feel the after-effects of a credit
crunch that was ignited by the US subprime crisis.

“The credit crisis is real, not just for our financial institutions
but for all of our clients who have either funding needs, in other
words they have to access debt markets, or they have liquidity
investments that could be exposed,” DiPiazza explained. “That
places a technical challenge on the profession to be sure that we
apply standards with judgement, we have to be part of the solution
and I think the profession’s done well setting out guidance,
consulting across our networks, among the firms. I think that’s
going to be a very interesting, challenging issue for the
profession over the next 12 months.”

Sufficient structure

Global chiefs from the mid-tier believe their firms
are well structured to deal with any downturn in business. Most
view the credit crunch as an opportunity to boost their insolvency
and recovery service lines.

Kreston International executive director and international
secretary Jon Lisby commented: “We are unusual in that in
comparison to many of the mid-tiers we are not… known for
insolvency work or business recovery and the indications are that
it will be a growth service line.”

BDO International chief executive Frans Samyn said an economic
downturn could loosen the job market and encourage professionals to
return to public practice.