commbank accounting market pulse. commbank accounting market pulse – july 2015 diana mousina...
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CommBank Accounting Market Pulse.Conducted by Beaton Research + Consulting
December 2015 (Wave 1 FY16)
1
COMMBANK ACCOUNTING MARKET PULSE – DECEMBER 2015
Contents
Foreword 2
Economic outlook 3
Snapshot of survey findings 5
Business conditions
Perceived performance of the Australian economy 7
Perceived performance of the Australian economy by segment 7
Perception of business conditions – present to 2017 8
Perception of business conditions by area – present to 2017 8
Perception of business conditions by area and firm type 9
Business priorities
Market entry planning and growth 11
Revenue predictions
Changes in revenue from FY14 to FY15 12
Changes in revenue by location over the next 6 months 13
Changes in revenue by service line over the next 6 months 13
Realised rates
Expected changes in realised rates over the next 6 and 12 months 15
Expense and profitability predictions
Changes in total expenses from FY14 to FY15 16
Changes in expenses over the next 6 months 16
Changes in expenses by segment over the next 6 months 17
Changes in staffing by segment over the next 6 months 18
Change in operating margins for the next 6 months 19
Adoption of technology
Adoption and implementation of new technology – all firms 20
Return on investment from new technology 21
Plans to change the investment in new technology 21
Provision of non-accounting services
Provision of non-accounting services 22
Revenue from non-accounting services 22
Changes in revenue from non-accounting services 23
Outsourcing and marketing
Frequency of outsourcing to lower cost providers 24
Outsourcing work over the next 12 months 24
Frequency of outsourcing to lower cost providers 25
Is marketing on social media vital to the success of accounting firms? 25
2
COMMBANK ACCOUNTING MARKET PULSE – DECEMBER 2015
Marc Totaro National Manager, Professional Services Commonwealth Bank
I am delighted to present the first-half edition of the CommBank Accounting Market Pulse for the 2015/16 financial year, conducted in partnership with Beaton Research + Consulting.
This survey, which captures a cross-section of accounting and restructuring firms revealed a marked improvement in overall business sentiment. Perceptions of current business conditions have picked up materially, with the positive uplift reflecting broader economic conditions.
Digging deeper, firms in New South Wales, the ACT and the Northern Territory are the most optimistic about revenue growth in the coming 12 months.
It is also noteworthy that the larger accounting firms have the most positive perception about both their business and broader economic conditions. That may partly be a function of their continued successful diversification beyond traditional accounting and advisory services. They are giving considerable thought to where they will find their growth, be it in technology advisory, management consulting or broader business advisory.
It is great to see that the top three challenges are no longer seen to be so daunting. Previously those industry challenges were rated between 50 and 60 per cent but that has fallen sharply to around 30 per cent.
Taken together, these two metrics indicate confidence has returned to the industry.
“ Nevertheless, our discussion with key industry players reveal the ongoing concerns with respect to traditional accounting and tax-based work becoming ever more commoditised and price driven.”
As the managing partner of one mid-sized firm responded in the survey, accountants need to think differently going forward if they are to maintain revenue and margin.
Firms are tackling the issue in various ways. There is a constant challenge to cross-sell higher margin services as a way to maintain revenue and remain profitable. Firms are also exploring new revenue streams, with the larger firms leading the way in expanding into non-traditional areas like legal services, recruitment and digital services.
“Most firms continue to look for cost reduction strategies to protect margins.”
For example, the trend to outsource and/or offshore compliance-based or shared services work to lower-cost providers continues apace.
In this regard, the key areas for increased investment in the next six months are staff training and IT hardware and software to support their strategy to become more efficient.
CommBank’s Accounting Market Pulse captures the industry’s latest trends and nuances so it serves as a tool for business planning and benchmarking. We value the opportunity to monitor key financial and operational performance indicators and share the resulting insights with you.
Email: [email protected] Tel : +61 2 9303 1940
Confidence returns as firms tackle longer-term challenges
3
COMMBANK ACCOUNTING MARKET PULSE – JULY 2015
Diana Mousina Associate Director Economics Commonwealth Bank
Over the past six months, domestic economic conditions have strengthened. Employment growth has exceeded expectations, with the unemployment rate falling to 5.9%, down from 6.4% in early 2015. Jobs growth has been concentrated in service sectors like healthcare, accommodation, education and professional services. As a result, consumer confidence has slowly improved, with the average household now optimistic about the economy and its own financial position. Business conditions have also increased leading to higher business confidence.
A stronger labour market is not only a plus for consumer confidence, it also encourages income growth and consumer spending. While consumer spending growth is still slightly below its long-run average, it has unquestionably improved, helping to create better conditions for Australian businesses. That, in turn, has given businesses a renewed sense of confidence — something very much reflected in this CommBank Accounting Market Pulse.
“Our latest survey reveals an upsurge in optimism among accounting firms across the country. For accountants, the outlook for the next two years is increasingly positive. Yet there is still plenty of room for improvement.”
Our survey shows that, despite growing confidence about business conditions, Australian accounting firms still hold a negative view of the Australian economy. Part of this negativity is the uncertainty over Australia’s ability to transition from mining to non-mining led growth. Yet that transition has already progressed further than many realise — with the decline in mining capex now around 50% complete. And despite the significant drag that the decline has produced, the economy has continued to grow, albeit below trend.
Business surveys often cite the need for stronger consumer demand to drive business investment. Non-mining investment has been low for some time, especially during the period when mining expenditure was crowding out activity in other sectors. That period has passed, consumer spending has now begun to pick up and interest rates are at record lows— yet non-mining business investment has yet to recover. This lack of spending by non-mining businesses is a key cause of uncertainty in Australia, particularly as mining capex is declining.
“Looking ahead, a falling Australian dollar will aid the transition. The dollar’s value is now nearly 20% lower than a year ago, and CommBank expects it to fall further when the US raises interest rates. An Australian dollar valued between 65 and 70 US cents looks likely for 2016.”
The good news is that a lower Australian dollar makes our exports more competitive internationally, and also helps Australian businesses that compete with imports. On the services side, a weaker dollar attracts foreign tourism, while also encouraging Australians to travel domestically, rather than overseas. As a result, tourism-related spending is lifting in Australia and will be a key driver of growth in the broad retail and accommodation industries.
Offshore growth trends are also important. Growth is expected to be slightly below the decade average for Australia’s major trading partners over the next two years. This is largely due to slower growth in China, as the Chinese economy rebalances towards service-orientated growth.
Economic outlook
COMMBANK ACCOUNTING MARKET PULSE – DECEMBER 2015
Real GDP (annual % change)
6
4
2
0
-2Sep-89 Sep-95
Early ’90s recession
Sep-01 Sep-07 Sep-13
Net
%
Trend
Labour Market Trends
Trend
6.5
5.9
5.3
4.7
4.1
3.5
40
30
20
10
0
-10Jul-05 Jul-07 Jul-09 Jul-11 Jul-13 Jul-15
Une
mpl
oym
ent r
ate
Employm
ent growth ('000)
4
While Chinese growth is slowing, the urbanisation process remains in full swing. The middle income population in China is lifting as a result. This shift also offers opportunities for Australia, given our strong trade ties with Asia. Industries that will benefit from Asia’s rising middle class include agriculture, education and tourism.
Inflationary pressures in Australia are subdued, although a lower Australian dollar means import
prices will rise in 2016. However, spare capacity in the economy is likely to keep domestic price growth low over the near term. As a result, Inflation is expected to stay within the Reserve Bank of Australia’s (RBA) 2%–3% target band, and low inflation gives the RBA room to keep interest rates low as well. At this stage, we do not expect the RBA to cut the cash rate from the current level of 2%, but another rate cut still remains a possibility, particularly if growth weakens and unemployment rises.
5
COMMBANK ACCOUNTING MARKET PULSE – DECEMBER 2015
Perception of business conditions
Net % (positive - negative)
In 2 years
W2 FY15 W1 FY16
56%55%
In 12 months
W2 FY15 W1 FY16
36%35%
At the moment
W2 FY15 W1 FY16
25%10%
Snapshot of survey findings
Revenue from non-accounting services
Geographic areas with highest revenue growth expectations
Top service lines to enter and grow in the next 12 to 18 months
New South Wales 68%
Northern Territory 67%
Australian Capital Territory 60%
Net % (increasing-decreasing)
Management consulting services 60%Large
firms
Business advisory services 33%Restructuring firms
Business advisory services, Management
consulting services 71%Mid-sized
firms
Business advisory services 62%Other firms
Top 3 challenges for accounting firms
“Significant difficulty in passing on cost increases to clients and charging for compliance work”
Net % (challenging - easy) % of respondents
33%Negotiating price with
clients
31%Keeping
quality staff
31%Finding
quality staff
5
Have 10% or more of firm revenue derived from non-accounting services
75% of Large firms
29% of Mid-sized firms
33% of Restructuring firms
65% of Other firms
6
COMMBANK ACCOUNTING MARKET PULSE – DECEMBER 2015
Outsourcing of work over the next 12 months
Level of investment in new technologies
The majority of accounting firms believe the pace of adoption of new technologies in Australia is either faster or on par with overseas markets
Top 3 areas of increased expenses over the next 6 months
Staff numbers
Net % (increasing-decreasing)
Net % (increasing-decreasing)
• Junior to mid-level accountants
• Equity partners
• Directors / Managers
• Fixed share / salary partners
• Shared service staff
• Secretarial and administration staff
54%Staff training and
development
51%IT hardware and
software
51%Marketing
and business development
Large firms
In the next 6 months In the next 12 months
Mid-sized firms
Other firms
Restructuring firms
Operating margins forecast
Net % (increasing-decreasing)% who think it will increase
6
40%
40% 60% 0% 0% 0% 14% 14% 29%
57% 33%
-67%
Large firms
Large firms
Mid-sized firms
Mid-sized firms
Other firms
Other firms
Restructuring firms
Restructuring firms
100%Large firms
57%Mid-sized
firms
67%Restructuring
firms
47%Otherfirms
7
COMMBANK ACCOUNTING MARKET PULSE – DECEMBER 2015
Business conditions
Perceived performance of the Australian economy
The perceived performance of the Australian economy remains slightly negative among accounting firms.
-100
-80
-60
-40
-20
0
20
40
60
80
100
Net %
15 17
60
-8-10
58
-25 -25
Wave 2 FY15 Wave 1 FY16
Net
% (
posi
tive
-neg
ativ
e)
Positive Negative Neutral
Perceived performance of the Australian economy by segment
Of the four segments, leaders of other firms are the least optimistic about the Australian economy’s performance
100
0
29
42
-29
0
20
60
-20
0
100
0
-100
-80
-60
-40
-20
0
20
40
60
80
100
Wave 2 FY15
Mid-sized�rms
Restructuring�rms
Other �rmsLarge �rms Mid-sized�rms
Restructuring�rms
Other �rmsLarge �rms
Wave 1 FY16
Net
%
Net %Positive Negative Neutral
20
60
-20
20
8014
53
-33
13
49
-38
0
-25 -19
20
8
COMMBANK ACCOUNTING MARKET PULSE – DECEMBER 2015
Perception of business conditions for Australian accounting firms – present to 2017
Accounting firm leaders are more optimistic about current business conditions compared to six months ago, and they remain confident across the long-term.
0
10
20
30
40
50
60
70
80
90
100
10
35 36
55 56
Wave 2 FY15 Wave 1 FY16 Wave 2 FY15 Wave 1 FY16 Wave 2 FY15
Likely to be in 2 years’ timeLikely to be in 12 months’ timeAt the moment
Wave 1 FY16
Net
%
25
Perception of business conditions by area
Price negotiation, staff acquisition and retention are considered to be the primary challenges faced by accounting firms.
-60
-80
-100
-40
-20
0
20
40
60
Net
% (
easy
-cha
lleng
ing)
47
-20-30
-55 -60
-40 -35 -35
-75
5
39
11 8
-22 -25 -31 -31 -33
Keeping stafffully utilised
Accessingcapital
Keeping expenses
under control
Competingwith
other �rms
Winning newbusiness
Collectinginvoices
Findingquality staff
Keepingquality staff
Negotiatingprice with
clients
Wave 2 FY15 Wave 1 FY16
9
COMMBANK ACCOUNTING MARKET PULSE – DECEMBER 2015
Perception of business conditions by area and firm type
Large and restructuring firms are finding it more challenging across most areas compared to mid-sized and other firms.
-120
-100
-80
-60
-40
-20
0
20
40
80
60
100
Net
% (
easy
-cha
lleng
ing)
Wave 2 FY15
Wave 1 FY16
Keeping staff fully utilised
Wave 2 FY15
Wave 1 FY16
Accessing capital
Wave 2 FY15
Wave 1 FY16
Keeping expenses under control
-20 -20
-50
-25-33
86
62
40
60
40
57
38
20
86
-50-60
-50-40
0 0 0 0 0 0
Large �rms Restructuring �rmsMid-size �rms Other �rms
-120
-100
-80
-60
-40
-20
0
20
40
80
60
100
Net
% (
easy
-cha
lleng
ing)
Wave 2 FY15
Wave 1 FY16
Competing with other �rms
Wave 2 FY15
Wave 1 FY16
Winning new business
Wave 2 FY15
Wave 1 FY16
Collecting invoices
-80
-50-60 -60
-80
-5
-75
-50
-20-29
-67
-33
140 0 0
29
Large �rms Restructuring �rmsMid-size �rms Other �rms
-20
-60-50-50
-40
-100 -100
10
COMMBANK ACCOUNTING MARKET PULSE – DECEMBER 2015
-120
-100
-80
-60
-40
-20
0
20
40
80
60
100
Net
% (
easy
-cha
lleng
ing)
Wave 2 FY15
Wave 1 FY16
Finding quality staff
Wave 2 FY15
Wave 1 FY16
Keeping quality staff
Wave 2 FY15
Wave 1 FY16
Negotiating price with clients
-20-29
-38
-20
-100
-63
-20-29
-75-80
-100
-19
0 0 0 0
-40
Large �rms Restructuring �rmsMid-size �rms Other �rms
-57 -60
-43-50-40
-100 -100
-33
11
COMMBANK ACCOUNTING MARKET PULSE – DECEMBER 2015
Business priorities
Market entry planning and growth
Business advisory, management consulting, superannuation, wealth management and tax consulting remain the primary areas of market growth over the next 12 to 18 months.
0
10
20
30
40
50
60
70
100
80
90
565547
30
44
20
44
25
3930
1920 1715 1715 17
5
Business advisory service
Managementconsulting
service
Wealthmanagement
& �nancialplanning
Taxconsulting
Taxcompliance
Corporate�nance
(including M&A)
External / statutory audit
Internal auditSuperannuation
%
Wave 2 FY15 Wave 1 FY16
0
10
20
30
40
50
60
70
100
80
90
1017 1415
8106 6 65
1450 00
30
Risk management
Propertyadvisory
Business recovery& insolvency
Forensic & fraudaccounting
Private equity
Sustainability / climate change
Economic andsocial policy
advice
Other
%
Wave 2 FY15 Wave 1 FY16
12
COMMBANK ACCOUNTING MARKET PULSE – DECEMBER 2015
Revenue predictions
Changes in revenue from FY14 to FY15
At the end of FY15, all firm types other than restructuring firms were in a better revenue position compared to FY14.
Restructuring �rmsMid-sized �rms
15
71
6.334
-33
-33
-7.8
-100
-80
-60
-40
-20
0
20
40
60
80
100
Large �rms Other �rms
Net
%
Stayed about the same
Decreased by 2-10%
Decreased by >10%
Increased by 2-10%
Increased by >10%
Mean
2038
48
-5
60
2097.4
9.214
13
COMMBANK ACCOUNTING MARKET PULSE – DECEMBER 2015
Changes in revenue by location over the next 6 months
Net forecast for total revenue has increased across all Australian states except for Victoria, down 11%, and the Northern Territory which remained the same.
-20
0
20
40
80
60
100
Net
%
New South Wales
NorthernTerritory
AustralianCapital Territory
Victoria Queensland Tasmania New Zealand South Australia
WesternAustralia
50
68 67 67 6760
56 5350 50 50
10
42
20
-8
47
0
43
Wave 1 FY16Wave 2 FY15
Changes in revenue by service line over the next 6 months
Large firm leaders are less optimistic about revenue across corporate finance, risk management and property advisory service lines. However large firm leaders did forecast greater revenue in sustainability/climate change service lines.
-100
-80
-60
-40
-20
0
20
40
80
60
100
Net
%
Wave 2 FY15
Wave 1 FY16
Economic and social policy advice
Wave 2 FY15
Wave 1 FY16
Wealth managementand �nancial planning
Wave 2 FY15
Wave 1 FY16
Superannuation
Wave 2 FY15
Wave 1 FY16
Business advisory services
100 100
75 8071
94
6750
0 0 0 0 0 0 0 0 0 0
50 5040
100 100 100 100 100 100 100
Large �rms Restructuring �rmsMid-sized �rms Other �rms
50
29
57
86
14
COMMBANK ACCOUNTING MARKET PULSE – DECEMBER 2015
-100
-80
-60
-40
-20
0
20
40
80
60
100
Net
%
Wave 2 FY15
Wave 1 FY16
Tax consulting
Wave 2 FY15
Wave 1 FY16
Management consulting services
Wave 2 FY15
Wave 1 FY16
Private equity
Wave 2 FY15
Wave 1 FY16
Property advisory
8075
40
7180 80
50 57
8976
67 67676750
33
100 100 100
Large �rms Restructuring �rmsMid-sized �rms Other �rms
50
25
80
33
0 0 0 0 0 0 0 0 0
67
-100
-80
-60
-40
-20
0
20
40
80
60
100
Net
%
Wave 2 FY15
Wave 1 FY16
Corporate �nance (including M&A)
Wave 2 FY15
Wave 1 FY16
Tax compliance
Wave 2 FY15
Wave 1 FY16
External / statutory audit
Wave 2 FY15
Wave 1 FY16
Forensic & fraud accounting
100
75
5040
6043
58 6067
4260
50
100
40 40
60 60
33
Large �rms Restructuring �rmsMid-sized �rms Other �rms
-50
80
50
0 0 0 0 0 00 0 0 0
-100
-80
-60
-40
-20
0
20
40
80
60
100
Net
%
Wave 2 FY15
Wave 1 FY16
Risk management
Wave 2 FY15
Wave 1 FY16
Sustainability/climate change
Wave 2 FY15
Wave 1 FY16
Internal audit
Wave 2 FY15
Wave 1 FY16
Business recovery & insolvency
67
25
67
25
67 67
3350
75
20 20
-25 -20
75
20 25
Large �rms Restructuring �rmsMid-sized �rms Other �rms
100
-17
-67
0 0 0 0 0 0 00 0 0 0 00
15
COMMBANK ACCOUNTING MARKET PULSE – DECEMBER 2015
Realised rates
Expected changes in realised rates over the next 6 and 12 months
All firm types except restructuring firms now have a more optimistic view on realised rates, compared to results
in our previous report.
2.52.5
-4.0
-2.0
0.0
2.0
4.0
6.0
Mea
n %
1.02.0
-1.6
1.52.5
2.01.5
2.53.6
-0.9-1.3
3.4
0.5
Wave 2 FY15 Wave 1 FY16 Wave 2 FY15 Wave 1 FY16
In the next 6 months (compared to the last 6 months) In the next 12 months (compared to the last 6 months)
Large �rms Restructuring �rmsMid-sized �rms Other �rms
1.3
16
COMMBANK ACCOUNTING MARKET PULSE – DECEMBER 2015
Expense and profitability predictions
Changes in total expenses from FY14 to FY15
Only restructuring firms had a net decrease in total expenses in FY15 compared to FY14.
34
-33
-33
-7.8
57
14
-29
1.6
-100
-80
-60
-40
-20
0
20
40
60
80
100
Mid-sized �rms Restructuring �rmsLarge �rms Other �rms
Net
%
Decrease by >10% Stayed about the same Increased by >10%
Decrease by 2-10% Increased by 2-10% Mean %
23
14-10
10
66
-31
-8
-35
-10
6.5 4.3
20
60
20
Changes in expenses over the next 6 months
Accounting firm leaders realise the challenge of retaining existing staff, as well as acquiring new staff, and are anticipating an increased investment in staff training and development as a result.
45
55
35
45
10 11
-5
54 51 51
41
23
35
Net
% (
incr
easi
ng-d
ecre
asin
g)
Wave 1 FY16Wave 2 FY15
0
-10
10
20
30
40
50
60
IT hardware and software
Knowledge management
Staff training anddevelopment
Marketingand businessdevelopment
Professionalindemnity insurance
TelecommunicationsOccupancy
17
COMMBANK ACCOUNTING MARKET PULSE – DECEMBER 2015
Changes in expenses by segment over the next 6 months
The increased forecast in staff training and development expenses are being driven by large and other firms. Mid-sized firms are controlling expenses across most areas resulting in a lower net increase in expense compared to the previous report.
3340 40
6075
60 65
2014
38 43
20
80
50
71
4560 60 60
80 80
5065
43
-50-33
-100
-80
-60
-40
-20
0
20
40
80
60
100
Net
%
Wave 2 FY15
Wave 1 FY16
Wave 2 FY15
Wave 1 FY16
Wave 2 FY15
Wave 1 FY16
Wave 2 FY15
Wave 1 FY16
Large �rms Restructuring �rmsMid-sized �rms Other �rms
IT hardware and software Knowledge managementStaff training and development Marketing and businessdevelopment
0 0 0 0 0 0
40 38 40
20 20 20 20 2540
-40
-67
-29
15
-14-25
-50-33
-20
-100
40
-100
-80
-60
-40
-20
0
20
40
80
60
Net
%
Wave 2 FY15
Wave 1 FY16
Professional indemnity insurance
Wave 2 FY15
Wave 1 FY16
Occupancy
Wave 2 FY15
Wave 1 FY16
Telecommunications
Large �rms Restructuring �rmsMid-sized �rms Other �rms
0 0 0 0
18
COMMBANK ACCOUNTING MARKET PULSE – DECEMBER 2015
Changes in staffing by segment over the next 6 monthsA higher proportion of large firms expect fee-earning staff numbers to increase, compared to the previous report.
80
43
20 2029 33
50
25 25
75
1726 20 13
60
33 33
-50
-100 -100
100
-120
-100
-80
-60
-40
-20
0
20
40
80
60
100
Net
% (
incr
easi
ng-d
ecre
asin
g)
Wave 2 FY15 Wave 1 FY16 Wave 2 FY15 Wave 1 FY16 Wave 2 FY15 Wave 1 FY16
Equity partner numbers Fixed share / salary partner numbers Director / manager numbers
Large �rms Restructuring �rmsMid-sized �rms Other �rms
0 0 0
4025
6067
29
-33-20 -20-14 -14 -14
14 14
-20 -20
-50-50 -50
60
-120
-100
-80
-60
-40
-20
0
20
40
80
60
100
Net
% (
incr
easi
ng-d
ecre
asin
g)
Wave 2 FY16 Wave 1 FY16 Wave 2 FY16 Wave 1 FY16 Wave 2 FY15 Wave 1 FY16
Junior to mid-level accountant numbers Shared service staf numbers (e.g. Marketing, IT, Finance, HR)
Secretarial and admin staff numbers
Large �rms Restructuring �rmsMid-sized �rms Other �rms
0 0 0 0 0
19
COMMBANK ACCOUNTING MARKET PULSE – DECEMBER 2015
Change in operating margins for the next 6 months
All firm types except restructuring firms are forecasting an increase in operating margins over the next 6 months.
10080
40 4057
33
-13
-67
Wave 2 FY15 Wave 1 FY16-120
-100
-80
-60
-40
-20
0
20
40
80
60
100
Net
% (
incr
easi
ng-d
ecre
asin
g)
Large �rms Restructuring �rmsMid-sized �rms Other �rms
20
COMMBANK ACCOUNTING MARKET PULSE – DECEMBER 2015
Adoption of technology
Adoption and implementation of new technology – all firms Mobile and document automation solutions have the highest adoption levels. Web based CRM software and enterprise social media platforms are the least likely technology solutions to be implemented in accounting firms.
0
10
20
30
40
50
60
70
80
90
100
%
Mobilesolutions
Web based CRMsoftware
Documentautomation
Cloud-basedcomputing / storage
Collaborationsoftware
Data analyticssoftware
Enterprise socialmedia platforms
Not implemented Looking to implement Currently implementing
Implemented but seldom use Implemented and frequently use
53 50
6
30
14
28
8
26
19
19
31
6
29
17
17
28
25
5
17
25
53
6
16
17
8
14310
31
42
8
6
33
21
COMMBANK ACCOUNTING MARKET PULSE – DECEMBER 2015
Return on investment from new technology
Of the accounting firms who have adopted new technology, mid-sized and other firms have seen the highest return on investment.
75
25
7
36
36
1470
40
60
80
20
10
30
50
70
90
100
Net
%
Large �rm
67
33
Restructuring �rm
17
17
49
17
Mid-sized �rm Other �rm
No return on investment Low return on investment Moderate return on investment
High return on investment Very high return on investment
Plans to change the investment in new technology
Large firms are most likely to invest in new technology over the next 6 and 12 months.
14
40
60
14
29
0 0 025
0
40
60
20
10
30
50
70
Net
% (
incr
easi
ng -
dec
reas
ing)
Large �rm Mid-sized �rm Restructuring �rm
Other �rm Large �rm Mid-sized �rm Restructuring �rm
Other �rm
Level on investment in new information and communicationstechnologies in the next 6 months
Level on investment in new information and communicationstechnologies in the next 12 months
22
COMMBANK ACCOUNTING MARKET PULSE – DECEMBER 2015
Provision of non-accounting services
Provision of non-accounting services All large, restructuring and mid-sized firms currently provide non-accounting services.
Mid-sized�rms
80
0
10
20
30
40
50
60
70
80
90
100
% Y
es
Large �rms Others�rms
Large �rms Others�rms
100
Restructuring�rms
100 100
Restructuring�rms
100
Mid-sized�rms
100
8175
Wave 2 FY15 Wave 1 FY16
Revenue from non-accounting services Large and other firms have the highest percentage of revenue from non-accounting services, compared to the last report.
29
42
29
Mid-sized�rms
Restructuring�rms
100
0
10
20
30
40
50
60
70
80
90
100
% Y
es
Large �rms Others�rms
Less than 5% 5-10% More than 10%
80
Mid-sized�rms
75
25
75
2517
33
50
12
24
64
20
Wave 2 FY15
Large �rms
33
34
33
Restructuring�rms
Others�rms
Wave 1 FY16
23
COMMBANK ACCOUNTING MARKET PULSE – DECEMBER 2015
Changes in revenue from non-accounting services The majority of firms expect revenue from non-accounting services to increase, especially in the longer term.
67
0
10
20
30
40
50
60
70
80
90
100
%
100
7165
88
67
100 100
Over the next 12 months Over the next 2 years
Large �rms Restructuring �rmsMid-sized �rms Other �rms
24
COMMBANK ACCOUNTING MARKET PULSE – DECEMBER 2015
Outsourcing and marketing
Frequency of outsourcing to lower cost providers Large and mid-sized firms are more likely to outsource their work to lower cost providers than restructuring and other firms.
20
40
40
0
40
60
80
20
10
30
50
70
90
100
%
Large �rm Other �rm
Never Almost never Rarely Somewhat frequently Very frequently
105
28
24
33
Mid-sized �rm
14
29
43
14
Restructuring �rm
33
34
33
Outsourcing work over the next 12 months
All large firm leaders forecast an increase in outsourcing work to lower cost providers over the next 12 months.
20
80
41
6
53
0
40
60
80
20
10
30
50
70
90
100
Net
%
Large �rm
67
33
Restructuring �rm
57
29
14
Mid-sized �rm Other �rm
Decrease signi�cantly Decrease About the same Increase Increase signi�cantly
25
COMMBANK ACCOUNTING MARKET PULSE – DECEMBER 2015
Frequency of outsourcing to lower cost providers Large and mid-sized firms are more likely to outsource their work overseas, whereas restructuring and other firms are more likely to outsource their work domestically.
100
33
67
33
14
53
0
40
60
80
20
10
30
50
70
90
100
Net
%
Large �rm Restructuring �rm
71
29
Mid-sized �rm Other �rm
In Australia Overseas Both in Australia and overseas
Is marketing on social media vital to the success of accounting firms? Over half of accounting firm leaders across large and restructuring firms agree that marketing on social media is crucial to their firm’s success.
60
20
20
514
47
24
100
40
60
80
20
10
30
50
70
90
100
Net
%
Large �rm
67
33
Restructuring �rm
29
29
42
Mid-sized �rm Other �rm
Strongly disagree Disagree Neutral Agree Strongly agree
26
COMMBANK ACCOUNTING MARKET PULSE – DECEMBER 2015
Notes:
27
COMMBANK ACCOUNTING MARKET PULSE – DECEMBER 2015
Further information
For further insights or information, please contact:
Marc Totaro, National Manager Professional Services
Mobile: 0477 739 315 Phone: +61 2 9303 1940 Email: [email protected] Web: commbank.com.au/accountingmarketpulse
For media inquiries, please contact:
Nichole Willson Phone: +61 2 9117 2947 Email: [email protected]
Things to know before you Can: This report is published solely for information purposes. As this report has been prepared without considering your objectives, financial situation or needs you should consider the appropriateness to your circumstances and, if necessary, seek appropriate professional advice. This biannual report has been prepared independently by Beaton Research + Consulting and is commissioned by Commonwealth Bank. The confidential online survey used to prepare this report was undertaken by Beaton Research + Consulting in September and October 2015. The report is based on the views of 36 accounting firms across Australia with combined revenue of approximately $5.7B. Any opinions, conclusions or recommendations are reasonably held or made based on the information available at the time of its compilation. No representation or warranty, either expressed or implied, is made or provided as to the accuracy, reliability or completeness of any statement made in this report. The project was undertaken in compliance with the requirements of ISO 20252. Commonwealth Bank of Australia ABN 48 123 123 124.
About Beaton Research + Consulting
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