Top 100 Accounting Firms: Accounting firms turn into tech companies

The Australian Financial Review's Top 100 Accounting Firms list for 2017 generated almost $10 billion in revenue. by Edmund Tadros Explore the top 100 accounting firm data here. Digital transformation has helped power double-digit growth across the major accounting firms, with the Top 100 generating almost $10 billion in revenue in the past financial year. The Australian Financial Review's Top 100 Accounting Firms shows outfits that have invested in technology and recruited or trained staff up in technical skills have grown revenue strongly in the past year. Growth was also evident in acquisitive firms, especially in the accounting and financial advisory space, and at smaller firms that focused on a market segment or a particular service offering. The Top 100 firms generated total revenue of $9.99 billion in the past financial year, up 10 per cent on the previous year. This compares to overall growth in the wider accounting industry, estimated at 1.5 per cent in 2017 by research house IBISWorld. The big four accounting and consulting firms – Deloitte, EY, KPMG and PwC – have ticked every box required to achieve growth, increasing their collective revenue by 11.3 per cent year-on-year. The big four posted $7 billion in total revenue in the past year, meaning they account for more than 70 per cent of the total income of the Top 100 firms in that period. The next eight largest accounting firms, on revenue between $100 million and $375 million, collectively grew at a more modest 4.2 per cent. The firms in this mid-tier segment had mixed results, ranging from Findex, where revenue  shrank slightly to $371.5 million, to Pitcher Partners, where revenue was up 13.8 per cent to $235.1 million. Pitcher Partners, along with other mid-tier firms Grant Thornton and RSM, pointed to some form of technology advisory as explaining at least part of their growth over the year. Economic recovery driving growth "I'd say that the industry as whole is doing better than it has for some time," said David Smith, the director of Smithink, a consultancy that advises professional services firms. "That is partially reflecting that the economy is doing a bit better. It's an overarching factor that is driving growth." Almost 75 per cent of firms in the list, produced by the Financial Review in partnership with Chartered Accountants ANZ, nominated business, tax and advisory services as among their fastest growing divisions, with cloud-based technology for both internal operations and clients being used by more than 80 per cent of firms. The big four have invested massively in new technology both for their internal operations – EY, for example, uses robotic process automation to cut the costs of internal functions – and to enhance or create new client offerings, such as Deloitte's Horizon service, which uses data and economic models for scenario planning. The big four view The big four firms continue to make technology acquisitions and have expanded into a variety of different areas such as engineering and marketing. All four big CEOs have said consulting and advisory services were among the fastest growing areas at their respective businesses. The CEO of EY, Tony Johnson, said his firm aims to have the right experts combined with the latest technology. "Global integration and scale is required if you're going to deliver [an excellent] customer experience," he said. "You've got to understand your client base and what services that client base will require. Then you design your structure off that. [So you] either invest or do alliances, you need to have a way to get access to the technology," he said. Cindy Hook, the chief executive of Deloitte, said that the firm's basic strategy "is to put together a broad array of capabilities that create solutions". "Accounting and assurance skills are still a big part of that, but as the world becomes more digitalised, digital technology has to be part of it, and human capital has to be part of it, and strategy has to be part of it," Ms Hook said. PwC's CEO Luke Sayers said the firm needed to "continually adapt and evolve" or risk becoming irrelevant. This meant the firm continued "to diversify into a broad range of other services including digital, cyber, risk, technology, real estate, legal, marketing and agribusiness", he said. At KPMG, chief executive Gary Wingrove said large firms were "well positioned to provide broader and deeper capabilities, and end-to-end solutions to clients." "Size and scale creates more capacity to invest for the future, including in technology, giving larger firms greater growth opportunities," Mr Wingrove said, adding that the firm "continues to invest in all our capability sets including across our audit, tax and advisory businesses". This growth in advisory, amid a flat audit market, is slowly changing the balance of power between partners at the big four, said Andrew Jackson, an executive search consultant and partner at Maven Partners, who specialises in tax, accounting and legal partners. "The interesting bit about the big four is looking at the individual practice growth," he said. "The top line is more to do with the consulting side of the business. There have been moves in some big four firms to combine traditional practices, such as corporate finance, deals and tax. There are two reasons. One is it aligns the practices with what clients are looking for and it also allows these partners to form a bigger collective unit and maintain their influence against the consulting partners." A tale of two mid-tiers Mr Jackson divided up the mid-tier into two groups, with BDO, Pitcher Partners and Grant Thornton having the scale to go for large corporate clients. "Across the country, they've got reasonably sized businesses. They can compete with the big four, but on a smaller scale. They can also invest in some of the more interesting technological areas," he said. Mid-tier firms below this level have more issues as they don't have the scale and ability to invest massively in technology. "The smaller mid-tier firms are the ones with the biggest issues at the moment. They look the same, feel the same, say the same thing. Not a lot of differentiation," Mr Jackson said. Mr Smith has a similar assessment of the entire mid-tier: "The challenge here is the mid-tier firms are going to find it very hard to compete with the overwhelming investment that the big four are making in technology. They'll never be able to match that investment. If they can't match it, how will they compete? That's if you make the assumption that whatever they are investing in will be groundbreaking investment." He added the mid-tier firms will argue they "try and compete on a client relationship level" and have strong relationships. "Their fees per partner will be lower than a big four firm. There is some truth to that. But how much is debatable," Mr Smith said. The golden 10 per cent The target revenue growth number that accounting firms generally aim for is at least 10 per cent, said Magnus Yoshikawa, the director of Jadeja Partners and a specialist in accounting merger and acquisitions. "The firms will do whatever they can do to get to that target. It's the golden 10 per cent. If they're not getting that people start to ask what is going on. They use tactics such as getting partners in or buying firms to get that growth," he said. About one-third, or 36, of the Top 100 firms had growth rates at or above 10 per cent. Another 47 firms had growth between 1 and 10 per cent, with 13 firms shrinking during the year. Another factor driving merger activity is the 2016 tightening of the rules around accountants providing advice about self-managed superannuation funds, and the difficulty and expense of obtaining a financial services licence for accountants. "The legislation change has brought movement and cultural change in the industry. The financial planners and accountants are sitting down, talking, joining together, and clients now expect easier access to their services under one roof," Mr Yoshikawa said. One example is AZ Next Generation Advisory which has used a string of acquisitions to triple in size to $37.7 million. "There should be uplift within the market as accounting and financial planners team up through mergers, outright purchases, equity swaps and so on, and there will be more of this activity. There are billions of dollars in funds looking to acquire accountants and financial planners." A lack of qualified accounting staff was another motivator for buying firms. "People are also doing acquisitions to get staff. Staffing is a real concern," Mr Yoshikawa said. Long tail of firms There are 17 firms with revenue between $20 million and up to $100 million in this year's list. This group had an even more mixed set of results than their larger peers. Revenue was unchanged at listed firm CountPlus ($87.6 million) and independent network UHY Haines Norton ($36.1 million). Meanwhile, acquisitions helped newly-listed Kelly+Partners boost revenue by 43.3 per cent to $30.2 million. The long tail of firms was also evident in the Top 100 Accounting Firm list. The 53 firms with revenue of between $1 million and $10 million earned a collective $237.7 million, up 6.3 per cent for the year. These small firms had between one and 10 partners with an average partner count of five. The staff count at these firms ranges from 8 up to 53 and averaged 30. IBISWorld estimates that 98 per cent of the 33,870 accounting firms in the country employ fewer than 20 people. The use of technology to cut internal costs and provide clients with self-service tools was happening across the industry. Boutique accounting and advisory firm Prosperity Advisers Group has cut the time spent on traditional compliance work by using direct data feeds from banks and cloud-based systems to jump straight into real time analysis of client financial data. Another smaller firm, Change Accountants & Advisors, has clients use cloud-based accounting systems to allow them to explore their own finances while the firm's experts provide analysis and guidance. The Top 100 Accounting Firms data is based on information supplied by firms who elected to participate. The rankings are based on a total revenue figure that include chargebacks in most cases. "Chargebacks" or "disbursements", expenses incurred as part of their advisory work that is passed on to clients at cost, averaged 2.6 per cent at the 84 firms that supplied that data. The big four, which did not provide a fees excluding chargeback figures, have previous said chargebacks made up between 5 per cent and 10 per cent of revenue. Most of the Top 100 is made up firms that are private and do not break out figures beyond revenue, making it difficult to ascertain its underlying financial performance. edmundtadros@afr.com.au Read more: http://www.afr.com/business/accounting/top-100-accounting-firms-accounting-firms-turn-into-tech-companies-20171119-gzoqn2?&utm_source=social&utm_medium=twitter&utm_campaign=nc&eid=socialn:twi-14omn0055-optim-nnn:nonpaid-27/06/2014-social_traffic-all-organicpost-nnn-afr-o&campaign_code=nocode&promote_channel=social_twitter#ixzz4zCUP7SM3 Follow us: @FinancialReview on Twitter | financialreview on Facebook Doors to Immigration are open whether you pass/ fail University Students Failed Rates Expenses/ Student U of Sydney 54360 36.8 $50,000.00 Monash U 64479 33.4 Macquarie U 38793 32.3 U of Melbourne 52257 29.8 U of Adelaide 26383 29.6 U of Queensland 48771 26.2 U of South Australia 32948 25.1 U of NSW 52326 21.9 RMIT 57433 20.7 U of Tech., Sydney 37683 19.6 Total 465433 $23,271,650,000.00 Australian Government expects to spend $464.26 billion in 2017/18 $6.2 trillion or approximately 45% of the debt held by the public was owned by foreign investors, the largest of which were Japan and China at about $1.09 trillion for Japan and $1.06 trillion for China as of December 2016. Education $33.8 billion The fiscal balance was in deficit by $44.5 billion (3.0% of GDP). Australian Government general government sector net debt was $164 billion (11.133% of GDP), which was $16.7 billion higher than estimated at the time of the 2012 Australian federal budget. https://www.facebook.com/RealEstateSA5000/posts/1320898851292024:0

United States IFRS decision 'most important since the 1930's'

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United States IFRS decision 'most important since the 1930's' Share on emailShare on facebookShare on twitterShare on linkedinMore Sharing Services Dec 04, 2012 In a speech to the American Institute of CPAs="Certified Public Accountant" (AICPA) 2012 Conference on Current SEC and PCAOB Developments, Paul A. Beswick (Acting Chief Accountant of the United States Securities Exchange Commission), said the decision on whether IFRS should be adopted in the United States may be the "single most important accounting determination for the Commission since... the 1930's". Notwithstanding his comments regarding the importance of the SEC's decision on IFRS, Mr Beswick gave little away in terms of the next steps the SEC might take, other than expressing an expectation of working with the new SEC Chair, Elisse B. Walter, and existing SEC Commissioners and commenting that people should "please stay tuned". Mr Beswick also discussed a broad range of topics, including the FASB's work around disclosures (including its proposed disclosure framework), and the corollary issue of what consideration should there be to creating overlap with existing financial reporting requirements outside the financial statements such as the MD&A (Management's Discussion and Analysis) required to accompanying financial statements. In discussing the various IASB "International Accounting/ Auditin Standards Board"-FASB "Financial Accounting Services Board" convergence projects (leases, revenue recognition, financial instruments and, to a lesser extent within the context if his speech, insurance contracts), Mr Beswick noted he was "encouraged about the level of convergence in the revenue and leases projects that Boards have achieved to date". Calling for "perspective" on the financial instruments project, he noted it was "almost unthinkable by some that the Boards would be able to reach substantive agreement on classification and measurement" and that the "Boards are a lot closer than probably many would have guessed". Mr Beswick went on to lament the failure of some to "acknowledge that the finalization of these projects will improve financial reporting for the benefit of investors". He also noted the challenges in achieving converged approaches to the interpretation and implementation of standards resulting from the projects and the need for securities regulators to work together on a global basis. The conclusion of the discussed various other issues such as auditor independence, the need for strong internal control over financial reporting, and the various developments worldwide looking to improve the audit report. A number of other speakers also spoke at the conference on IFRS-related matters. ================= SEC charges China arms of top accounting firms Tue, Dec 04 02:44 AM EST 1 of 3 By Aruna Viswanatha and Rachel Armstrong WASHINGTON/SINGAPORE (Reuters) - U.S. regulators have charged the Chinese arms of the world's five top accounting firms with securities violations, raising tensions in a regulatory standoff which experts say could kill off U.S. listings for Chinese firms if not resolved. Monday's move indicated China was refusing to yield in talks with the United States over access to Chinese audit papers, trying to keep foreign regulators off what it sees as its turf. The Securities and Exchange Commission (SEC) wants the firms to supply documents relating to audits of U.S.-listed companies suspected of possible wrongdoing, but the audit firms say they are prevented from doing so by Chinese state secrecy laws.

"I think China has determined that it does not want to cooperate in this way. It believes this is an impingement on China's national sovereignty, and it's just too far for them to go," said Paul Gillis, a professor at Peking University and author of the China Accounting Blog "They want the U.S. regulators to rely on the work of Chinese regulators, and that has been their position and apparently continues to be their position," said Gillis.

The SEC began proceedings against the Chinese affiliates of Deloitte, KPMG, PricewaterhouseCoopers (PwC), BDO and Ernst & Young. The agency on Monday also moved to pursue a case they had put on hold against Deloitte. It was the SEC's widest enforcement effort yet to procure documents in connection with probes of possible accounting fraud of U.S.-listed Chinese companies, however lawyers voiced doubts over whether it would help them make a breakthrough. "Simply swinging the hammer of enforcement, while effective at garnering headlines, will likely not be enough to achieve the SEC's goal," said William McGovern, a partner at Kobre & Kim in Hong Kong and a former SEC attorney. The SEC, which is seeking documents in investigating possible wrongdoing at nine China-based companies, said an administrative law judge would schedule a hearing to determine potential sanctions against the accounting firms' Chinese arms. It was unclear whether the SEC's move would result in financial penalties and discourage the firms from working with certain Chinese companies, or it was designed to force a breakthrough in the larger negotiations. ULTIMATE SANCTION Peking University's Gillis said if no diplomatic solution could be found, the SEC might ultimately suspend the Chinese firms' right to practice - a sanction that could in turn mean that their U.S.-listed client companies would have to de-list. "That would mean they cannot audit U.S.-listed public companies," he said. The SEC said in July it was in talks with Chinese regulators on cross-border cooperation, including access to documents, but Monday's action suggested it was unhappy with progress. U.S. accounting regulator the Public Company Accounting Oversight Board (PCAOB) has now reached agreements with almost every major economy aside from China on being allowed to inspect foreign auditors of U.S.-listed companies. "Firms that conduct audits knowing they cannot comply with laws requiring access to these work papers face serious sanctions," SEC enforcement director Robert Khuzami said in a statement announcing the action. The accounting firms called for regulators to negotiate a solution, noting that U.S. and Chinese laws were in conflict. "This action involves an issue that needs to be resolved between the U.S. and China," PwC China said in a statement. Deloitte said it was unfortunate the two sides could not find common ground but "we remain hopeful that a diplomatic agreement can be reached". China affiliates Ernst & Young Hua Ming and KPMG Huazhen said they too still hoped for an agreement. BDO did not immediately respond to a request for comment. Top accounting firms operate as global networks of legally separate member firms in each country, so all member firms are not jointly liable for auditing work done in any one country. Lawyers say there is still a queue of Chinese companies eager to tap U.S. capital markets, despite the problems faced by many of their peers that went before them. "I would estimate that there are probably 30 to 40 China-based companies in some stage of pursuing a U.S. listing at this time," said Alan Seem, a partner at law firm Shearman & Sterling in Beijing. Separately, Canada's securities regulator said it believed Ernst & Young had breached the Ontario Securities Act in its audits of Sino-Forest Corp, a China-focused forestry company which collapsed after being accused of accounting fraud. Ernst & Young Canada said in a statement it was confident its work "met all professional standards". Last year, the SEC took Deloitte to federal court to try to force it to turn over documents in connection with an investigation into China's Longtop Financial Technologies Ltd. In July, it sought a six-month delay in that legal battle, citing negotiations with Chinese regulators. On Monday, the SEC said those talks had failed and it filed a motion to proceed with the case. It also renewed efforts to obtain the documents related to the Longtop audit. The PCAOB, the U.S. accounting watchdog, recently completed observations of Chinese inspections of auditors and expressed optimism about talks over access to audit documents. In a statement, PCAOB Chairman James Doty said his agency's negotiations were proceeding on a separate track from the SEC. If the agency's efforts do not lead to an agreement, "then we will need to consider other alternatives", Doty said. (Additional reporting by Dena Aubin in NEW YORK and Aileen Wang in BEIJING; Editing by Mark Bendeich) ============