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The global financial crisis is affecting the accounting profession
in many jurisdictions but Italy is feeling it worse than most. A
survey of Italian firms by the International Accounting Bulletin in
April this year found the economic downturn was affecting the
revenue of firms.

The survey revealed market growth of just 3
percent, the worst result for Italian firms in at least five years.
The growth was also the lowest among any markets the publication
had surveyed over the previous 12 months and considerably less than
the 14 percent increase in combined revenue reported in the 2007
Italy survey.

The profession has not been helped by the
performance of Italy’s economy. The GDP contracted by 1 percent in
2008. The International Monetary Fund predicts a 5.1 percent
contraction in 2009 and 0.1 percent contraction in 2010.

One factor that could be exacerbating the
effects of this downturn on the profession is an oversupply of
qualified accountants. Italy has more than 100,000 professional
accountants in a population of 60 million.

In comparison, according to data from The
Accountant, there are about 30,000 professional accountants in
Germany, which has a population of 82 million; France has about
18,000 professional accountants and a population of 65 million.

The UK has a far higher concentration of
professional accountants than Italy, let alone the other European
countries, with a population of 62 million and more than 200,000
members of the five chartered accountant bodies (not counting those
based overseas and those who are retired or honorary).

The combination of a glut of professionals and
the recession means there is not enough work for accountants and
industry veteran Johannes Guigard says competition is fierce.

Guigard is a member of the Milan chapter of
Italy’s National Institute of Accountants (Consiglio Nazionale dei
Dottori Commercialisti ed Esperti Contabili – CNDCEC). He is also a
member of the European Financial Reporting Advisory Group SMP
working group, chairs the Federation of European Accountants
(Fédération des Experts Comptables Européens – FEE) company law
task force and sits on the United Nations Conference on Trade and
Development Intergovernmental Working Group on International
Standards of Accounting and Reporting.

Guigard says the fierce competition is
amplified by the fact that there are too many micro-practices.

“The practice is normally me and my wife, me
and my brother, me and my son – that’s it,” he says. “There are
just two of us plus maybe three to five people working for us. As
you are mainly a boutique, when clients start to become fewer or
start asking for fewer services, what can you do? Not much.”

It is a difficult problem to rectify, Guigard
explains, as everyone wants to remain boutique practices.

On top of the challenge created by this
inflexibility is the fierce competition from the Big Four, law
firms and payroll service providers.

Guigard says the divide between the Big Four
and the rest in Italy is more extreme than anywhere else in
Europe.

According to International Accounting Bulletin
data, the average annual revenue of Big Four firms in Italy is 10
times the revenue of the largest mid-tier firm, Mazars. In
comparison, the average revenue of Big Four firms in Germany is six
times that of the largest mid-tier firm, BDO; the average revenue
of Big Four firms in France is less than three times more than the
largest mid-tier firm, Mazars; and the average revenue of Big Four
firms in the UK is five times that of the largest mid-tier firm,
Grant Thornton.

There is also significant competition from law
firms and payroll service providers. Guigard says there is a
payroll service association and theoretically service providers
need to be qualified, but it is difficult to set boundaries for
what non-professionals can and can not do.

“We have non-qualified competition from people
coming, for instance, from the public offices, people working in
the receiver office for instance,” Guigard says. “So now
[professional accountants] are suffering.”

Despite the challenges facing the profession,
Guigard remains optimistic.

“I see that now the situation is a little bit
different for everybody, but there is not a big crisis, people are
not saying ‘we don’t know how to survive’. So after all the
profession is still working well, it is well respected,” he
says.

Italy

Quick facts

• Population: 60 million
• Labour force: 25 million
• Labour force by occupation:
• Services 65 percent, industry 31 percent, agriculture 4
  percent
• GDP growth 2008: -1 percent
• GDP projected growth 2009: -5.1 percent
• Market value of publicly traded shares: $1.07 trillion
  (2007)
  

  Source: CIA World Fact Book