profession’s elite - agn international€¦ · practice in the accounting profession. the awards...

www.InternationalAccountingBulletin.comSeptember 2014 Issue 541

IAB Annual Award winners

● UK CMA and EC take hard line on new rotation rules ● Profession in France resilient in tough economy

● Latin America’s modern day gold rush ● Unsettled times for Dutch profession

Profession’s elite

September 2014 y 1www.InternationalAccountingBulletin.com

Editorial Advisory BoardKevin McGrath, Crowe Horwath International CEOKevin Arnold, Nexia International CEOGeoff Barnes, Baker Tilly International president and CEOGraeme Gordon, Praxity executive directorStephen Jacobs, INPACT International presidentJon Lisby, Kreston International executive directorJames Mendelssohn, MSI Global Alliance, chairmanChristian Mouillon, E&Y global vice-chair, assuranceEd Nusbaum, Grant Thornton International CEOMichael Reiss von Filski, Geneva Group International CEOLiza Robbins, Morison International CEOMartin van Roekel, BDO International CEOJean Stephens, RSM International CEORobert Tautges, HLB International CEOPauline Wallace, PwC head of public policy and regulatory affairs

It’s September and another successful International Accounting Bulletin event is behind us.

This year our headline sponsor Aon, as well as Intuit QuickBooks, CaseWare, Star Computers and Xero, enabled us to enhance the annual awards evening and develop it into a half-day conference discussing some of the key challenges facing the profession.

The inaugural IAB Forum, which took place on 16 September in London, was the first such event in the more recent history of IAB and the response from the profession was excellent with many of you compli-menting us on the agenda and the high-quality speakers discussing recent M&A trends and their effects on the industry, and the issue of cyber security for accounting firms.

I would like to take this opportunity to thank Aon Global Professions managing director Keith Tracey for helping our team prepare and secure some of the speakers. I would also like to thank all the speakers which includes Linklaters partner William Buckley, global CEO for BDO’s EMEA region Anders Heede, Grant Thornton International general counsel Dan Lichten-stein and Wragge Lawrence Graham & Co partner Jane Howard, who all spoke in the M&A session. As well as UK Government BIS assistant director Orla MacRae, PwC security director Jonathan Burdett, Open-Sky practice director – cyber security, risk and compliance Nigel Stanley and Intuit QuickBooks head of business development Nick Williams, who were our panellists in the cyber session.

I would also like to thank all 17 senior executives who attended the round table

and all who attended the event and awards. If you were unable to attend the session there will be an article summarising the M&A and cyber discussion in the October issue of IAB.

In this month’s issue you can capture the spirit of the evening from the pictures and awards coverage. While the Forum was a first for IAB, this year’s Awards were our third and we received over 100 nominations with the judges remarking on a really high quality of submissions this year. The big winner of the evening was KPMG, which was handed the Audit Innovation of the Year Award, Social Media Champion of the Year Award and Sustainable Firm of the Year Award. Other winners included RSM, Praxity, Grant Thornton International and many more.

The winners also included IAASB chair-man Professor Arnold Shilder who won the Lifetime Achievement Award, IIRC’s Paul Druckman for Personality of the Year and Kader Kaneye from Niger who won the Young Accountant of the Year Award.

I would like to take this opportunity to encourage you all to nominate again next year and battle the competition once more with hopefully some more new contenders to emerge.

We hope that all the positive event feed-back is a good sign for future IAB awards and that we’re able to build on our recent achievements and, as always, we’re always keen to hear your views and feedback.

Congratulations again to all our winners and shortlisted networks and associations.

Ana [email protected]

Thanks for a great event

EdiToR’S LETTERInternational Accounting Bulletin

NEWS 02-03

CoNTENTS

■ PwC UK revenue up 5% to £2.8bn.

■ Deloitte UK growth slows as audit revenues fall.

■ UK CMA and EC take hard line on new rotation rules

iAB AWARdS 04-08

CouNTRy SuRvEyS 09-20

o4-08: ANd ThE WiNNER iS...

This month International Accounting Bulletin hosted its annual global industry awards celebrating worldwide best practice in the accounting profession. The awards ceremony was part of a half-day inaugural IAB accountancy forum in London and joined industry leaders and old friends from around the world.

13-19: LATiN AMERiCA

positive economic indicators, SMEs going international, and accelerated regional economic integration are sources of optimism for accounting firms in Latin America, as vincent huck reports.

o9-12: FRANCE

After another year of economic inertia in France, opinion is divided on whether anticipated modest growth in 2014 and 2015 will translate into increased professional activity. Paul Golden reports.

20-24: NEThERLANdS

Despite high-profile developments on audit reform, the shakeout of the Dutch accounting profession is far from complete. Paul Golden reports.

2 y September 2014 www.InternationalAccountingBulletin.com

NEWS International Accounting BulletinRouNd-uP

uK

PwC uK revenue up 5%PwC UK has reported an increase of £125m in its fee income to £2,814m ($4,576m) in the year to 30 June 2014.

The 5% increase in fee income “reflects an improving economy, the growing confidence of our clients and the ongoing investment we have made in the firm over the past six years to create a responsible, profitable and well diversified business,” according to PwC UK chairman and senior partner Ian Powell.

PwC UK saw an increase in fee income across all its service lines with assurance up 6% to £1,025m, tax 5% to £714m, deals business up 3% to £580m and consulting by 4% to £495m.

With assurance services, including audit, contributing to just over £1bn of the overall revenue the firm said 63% of its revenue was generated from clients it does not audit.

Due to retendering rules and pending implementation of the European audit reform, the UK market has seen many FTSE 350 companies retender their audit contract. In the past year PwC has won audit tenders such as HSBC, Vodafone and British Land.

PwC has retained its position as the largest professional services firm in the UK, with its close competitor Deloitte UK reporting revenues of just over £2.5bn in the year to 31 May 2014, an increase of 1.4%.

The firm hired 2,700 people and the average distributable profit per partner was £722,000, up 2% from £711,000 in 2013. The firm’s results also include the PwC network Middle East practice.

uK

deloitte uK growth slows as audit revenues fallDeloitte UK has seen its growth slow to 1.4%, as revenue increased to £2.55bn ($4.23bn) for the year ending 31 May 2014, compared to £2.52bn last year.

The growth figure marks the lowest level in four years and a sharp fall compared to the 8% revenue increase witnessed in 2013 and 11% growth in 2012, which was mainly on the back of strategic investments.

Among the firm’s service lines, audit fell 1.8%, from £719m in 2013 to £706m. The decrease comes after last year’s 12% increase in fee income in audit.

The decrease in audit is likely down to pending mandatory audit firm rotation and many FTSE 350 already retendering their audit contracts. Last week PwC forecasted 56 of the FTSE 350 are to put their audit out to tender this year.

For Deloitte UK tax revenues remained flat at £562m, compared to £563m last year.

Consulting increased slightly (0.5%) from £619m last year to £622m, while corporate finance bucked the trend with a 4.7% increase to £424m from £405m

in 2013.Profit distributable to partners

for 2014 fell from £571m in 2013 to £554m at the end of May, with the average profit earned by partners also decreasing in 2014 to £750,000 from £772,000 the previous fiscal year.

Overall, employment figures increased from 3,000 to 3,500, with 72 new partners and 1,500 new entry-level positions added.

Deloitte UK chief executive and senior partner David Sproul attributed the slowdown in growth to “uncertainty” in the market and added that despite a “year of investment” for the firm, doubt continued to dampen prospects for the coming months.

“Looking ahead, we expect that better economic conditions will result in significant improvements across our markets. Growth has increased in the first quarter of the new financial year and we are seeing a renewed confidence and optimism in our clients to make investment decisions. The global ambition of our clients and our people is creating opportunities for the firm to increase revenue internationally,” he said.

“However, while we continue to make investments for the future, we do hold a concern that political uncertainty may dampen business activity later in the year.”

Deloitte UK results also include the network’s Swiss practice, which contributed £236m to the firm, a 13% increase on last year’s figure of £209m.

NEWS RouNd-uP

MovERS & ShAKERS

Ey uK has appointed Jason Lester

as head of tax in the uK and

ireland.

Lester has a 20-year career with

Ey. Prior to his appointment, he

served as tax markets leader for

the uK and ireland and also led

Ey’s business tax services team.

Baker Tilly, based in the UK, which

joined RSM International earlier

this year, has appointed Jonathan

Ericson as the firm’s new head of

audit.

Ericson has been a regional audit

managing partner and a member

of the audit management team at

Baker Tilly since 2011. He joined

Baker Tilly in 1996 before becoming

a partner in 2000.

AGN Europe has appointed

Marlijn Lawson as regional

director for Europe. After joining

AGN Europe as international

executive assistant in 2008,

Lawson was appointed director

of membership and event

management for the association

in early 2013.

Santa Fe Associates International

(SFAI) has reappointed Alfredo

Spilzinger as chairman of the

network’s executive board for

another four-year term.

The network has also appointed

former KPMG partner Pablo

Fudim as chief technical officer

and former Grant Thornton

International partner Claudio

Rodriguez as chief compliance

officer.

SFAI is a network of independent

member firms headquartered in

Santa Fe, New Mexico in the US.

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IAB oNLiNE – SEPTEMBERTop 5 articlesFemale partner appointments remain low as KPMG UK adds 52 partners

EY and the Parthenon Group complete merger

G20 fail to stop global warming: PwC

Deloitte UK growth slows as audit revenues fall

Grant Thornton continues its external growth strategy

Most retweeted articleGrant Thornton continues its external growth strategy

Read in 170 countriesUK 28%

US 10%

Mexico 9%

Malaysia 6%

India 5%

Rest of the world 39%

Singapore 3%


NEWSInternational Accounting Bulletin ANALySiS

uK

UK CMA and EC take hard line on new rotation rulesUK FTSE 350 companies which have recently retendered or changed their auditor in the UK are most likely going to have to do so again as early as 2016 under the new audit rules introduced in the UK and the EU.

In its draft order on statutory audit ser-vices for large companies, the UK’s Com-petition & Market Authority (CMA )ruled that businesses which had recently appoint-ed their auditors will not benefit from the transition period and under these rules would be the first to put their audit out for tender again, some as early as June 2016.

The CMA’s stand was later supported by the European Commission (EC) which published a letter in early September stating that the EU regulation was to be interpreted in the same way by other EU member states.

The profession had expressed its concern on the matter while answering the public consultation launched in July this year by the CMA on its draft order which aimed to align the EU audit regulation with the findings of the UK Competition Commis-sion investigation.

PwC UK partner Gilly Lord said: “As the CMA is saying we want 10 years tendering and the EU says you must rotate after 20 years if you tender after 10 years, it looks

like the two regimes will overlap neatly.”However the profession is concerned over

the transition periods adopted. In its draft order the CMA aligned with the provisions of the EU regulation which divides compa-nies in three categories, as of 17 June 2014 (the date the regulation was issued): com-panies which had an auditor for 20 years or more will have six years to comply with the new rules; and companies which had the same auditor for between 11 and 20 years will benefit from a nine-year transi-tion period.

But for the third category: companies which had the same auditor for less than 11 years, the EU provision could be interpreted in different ways. “One way to read it was to say that these

companies would benefit from a 12-year transition period, which is quite logical,” Lord said. “Another way of reading the rule is to say that these companies would be moved straight on in the new regime with-out transition.”

Businesses which had appointed an audi-tor in 2005 would then have to put their audits out to tender as soon as June 2016 (the date at which the regulation will be enforced). In its draft order the CMA chose

the second interpretation. “We don’t believe this interpretation is the

right one,” Lord said. “And it’s the most fundamental point we are making in our response to the CMA.”

ICAEW head of integrity and markets Tony Bromell said the profession had hoped the rule would not be interpreted in this way. “But it’s the one the CMA adopted and it’s the one the European Commission has also adopted,” he said referring to an open letter by EC internal market and services director general Jonathan Faull which aims to clarify the EU rules.

In his letter Faull clearly states that PIEs which appointed their auditors on or after 16 June 2003 “will need to change their given audit firm or statutory auditors by 16 June 2016”.

Lord highlighted that this letter was pub-lished nearly two months after the CMA launched its consultation and a few weeks after accounting firms and professional bodies had sent their replies. “That letter is not legally bidding,” she

added. “But having said that I suspect it will be very influential when the CMA decides if it wants to make any changes to the order.”<

Chicago-based Baker Tilly Virchow Krause and ParenteBeard in Philadelphia, both members of Baker Tilly International, have merged to become Baker Tilly Virchow Krause, effective from 1 October. The resulting firm will have more than 2,500 employees across 29 US cities and earn annual revenue of $475m, according to the network. Baker Tilly International is counting on the new firm to strengthen its presence in the US’s northeast corridor between the financial and political centres of New York and Washington DC.

MSi Global Alliance has expanded its association to Azerbaijan by appointing E&S Accounting and Consulting as a member firm.

GMN International has added

Mauritian firm Global Wealth Management Solutions (GWMS) to its association.

GWMS is headquartered in the island’s second-largest city Beau-Bassin Rose-Hill. The firm has 19 staff managed by three directors and provides financial services including accounting and tax.

Baker Tilly international has added accountancy firm Bardon Molumby, based in Portlaoise, ireland, through merger with its irish member firm Baker Tilly Ryan Glennon.

The merged firm will trade as Baker Tilly Ryan Glennon and employ over 150 professionals across offices in dublin, Galway, Birr and Portlaoise.

Auren will integrate Colombian firm TH&R Consultores y Auditores within its international network, effective from 13 October.

The network already has a presence in the country through Antea, an international association of which it is a founding member.

Ey and The Parthenon Group have finalised their merger announced in July.

Parthenon Group’s 300 professionals in offices in Boston, London, Mumbai, San Francisco, Shanghai and Singapore and Ey’s investment strategy practices will operate under the Parthenon-Ey brand as part of Ey’s global transaction advisory services.

Baker Tilly Malaysia has added Chang

& Associates to its network.

Through the merger, Baker Tilly

Malaysia expands to eight offices

in the country. Chang & Associates

will rebrand to Baker Tilly CKF as a

consequence.

Geneva Group international has added Japanese firms Tokyo Consulting Group and Kyowa Accounting Group to its network.Tokyo Consulting Group, established in 1998, employs over 300 staff, including four managing partners, located in the Tokyo headquarters and branches in yokohama, Nagoya, and osaka. The firm provides accounting, tax, advisory, and corporate finance services in several European and Asian languages.

FirmMovements


iAB AWARdS

More than 100 industry leaders attended the International Accounting Bulletin industry awards in London this month. Three years after the inaugural IAB Awards, the event has grown its reputation and year after year we are

attracting more and more nominations and attendees.This year we received very strong nominations across all 13 cat-

egories. The shortlist and the winners were decided by the judging panel

comprising Jane Howard, head of accounting and actuarial liability at Wragge & Co, Association of Chartered Certified Accountants (ACCA) head of external affairs Sue Almond, Chartered Institute of Public Finance and Accountancy (CIPFA) chairman Ian Ball and International Accounting Bulletin editor Ana Gyorkos.

NETWORK OF THE YEAR

RSMThe judges were impressed by the strong nomination material, especially client development and demonstration of a thoughtful approach to achieving growth without compromising quality or service. In 2013 RSM admitted members in 11 countries and con-ducted in-country mergers in Argentina, Brazil, Norway and the UK. The network grew cross-border referrals by 17% in 2013 and in Q1 2014 referral figures were up 15%, compared to Q1 2013. With its “Where on Earth” and “RSM World Day” initiatives the network has successfully strengthened its brand internally and with external interested parties.

RISING STAR NETWORK OF THE YEAR sponsored by Intuit

TGS TGS’s growth, in just over two years, into an organisation of 1,300

staff in 48 locations in 30 countries convinced the judges of its potential. The new network has reported a fee income increase of 20% so far in 2014 by adding further members in six countries. TGS has also created a modern brand identity, with currently 60% of members adopting the TGS name as a prefix and further firms looking to adopt it in the second half of 2014. The judges were impressed with the international nature of TGS and felt it really reflected the raising star nature of the award.

ASSOCIATION OF THE YEAR sponsored by Star Computers

In this category we have a highly commended association, INPACT International. The judges felt the association demonstrated growth in its culture as well as business growth. They were also impressed by the relationship-based approach and regional activity focus. PraxityThe association was awarded the raising star award in 2013 by IAB and the judges concluded that this year the association has demon-strated strong growth, a spread of new members, and a clear indica-tion that its growth is sustainable. With annual revenue of $4.1bn, 33,496 staff, and enhanced delivery of internal services to member firms and external services to clients, Praxity demonstrated strong performance and achievement in the past year.

RISING STAR ASSOCIATION OF THE YEAR

ANTEAANTEA, an association from Spain, has impressed the judges with its quick development and expansion since its inception in 2008. Antea is present in 60 countries with more than 200 offices, $236m in revenue, and 3,016 staff.

And the winner is…This month International Accounting Bulletin hosted its annual global industry awards celebrating worldwide best practice in the accounting profession. The awards ceremony was part of a half-day inaugural IAB accountancy forum in London and joined industry leaders and old friends from around the world


International Accounting Bulletin IAB AWARdS AWARdS

AUDIT INNOVATION OF THE YEAR

KPMG for its Lean in Audit With this innovation KPMG has taken the ‘Lean’ customer-oriented business improvement methodology focusing on delivering quality and value through the eyes of the customer and used it in delivering a financial statement audit.

Lean thinking emerged in the early 1990s and quickly became one of the most widely used business improvement techniques. It is sup-ported by the Lean Enterprise Research Centre, which together with Harvard University is recognised as one of the centres of excellence for Lean thinking.

The concept of introducing Lean into the audit was conceived by KPMG’s Australian firm in 2011 as an idea to improve audit quality and increase value for clients. Thus far the method has been introduced to more than 15 audit clients, with more than two-thirds saying the method has improved their experience with the firm.

ADVISORY FIRM OF THE YEAR

PwC PwC announced at the end of 2013, and finalised in early 2014, its acquisition of global consultancy Booz & Co, which has 300 part-ners, 3,000 staff, 57 offices, and $1.4bn in annual revenues. In April the business, now part of the PwC global network, was rebranded as Strategy&.

This investment by PwC convinced the judges of its commitment to addressing client demand for a correct strategy, and its ability to execute this via an experienced and accountable advisor.

EMPLOYER OF THE YEAR

Grant Thornton InternationalThe judges were impressed by the network’s strong commitment to its employees, its secondment programmes, and its focus on quality.

In 2013, the network set out to create a global Employee Value Proposition (EVP) for the organisation. While the EVP is still in development, the network says it will be used to clarify what it has to offer to potential employees in a clear and powerful manner, enabling Grant Thornton to attract and retain the best talent in the marketplace.

To support the learning and development programme the network also has an Advanced Manager Programme as well as a Leadership Foundation, which is helping staff develop into better leaders. The judges were also impressed by the network’s global talent mobility programme, which has to date supported 320 secondments across the network.

SUSTAINABLE FIRM OF THE YEAR

KPMG This is a third win in row for KPMG in this category and goes to show the global network’s strong commitment to running a sus-tainable business. After surpassing the Phase I emissions reduction target, KPMG’s current ambition is a further 15% reduction in net

emissions per full-time equivalent by 2015, compared to 2010. The network reported significant progress in 2013 and thus far achieved an 8% net emissions reduction since 2010. KPMG has also publicly disclosed its global results and reported to the Carbon Disclosure Project. KPMG also continued its policy of significant investment in communities – through pro bono activities, skills-based volunteering, financial contributions, and general volunteering.

SOCIAL MEDIA NETWORKING CHAMPION OF THE YEAR

Due to a significant number of nominations in this category, from single firms as well as global organisations, we decided to hand out two awards: one for a single firm and another at international organisation level.

Single firm: Ebner StoltzThe judges were impressed by how the firm managed to increase the number of job application in the past 12 months due to its social media campaigns and by the collaboration between its social media, marketing and HR team.

The firm especially focused on Facebook as a key vehicle to strengthen its brand, by communicating news, launches, success stories, and by sharing authentic content that has been informative, engaging and humorous.

Global level: KPMGIn Q1 2014 KPMG’s global LinkedIn company page acquired 27,000 followers and its Twitter account acquired 13,900 followers, bring-ing the total to 115K+ and 100K+ followers, respectively. The network also launched an Instagram account to share photos for industry and recruitment events. Shortly after launch, it achieved a 61% engagement rate, the highest of all social channels used by the network.

Like last year, KPMG’s social media campaign, World Economic Forum Live (WEFLIVE), was one of the most successful campaigns, with enhancements introduced in filtering, search and data visualisa-tion features.

IT VENDOR OF THE YEAR

XeroIn the past 12 months, the number of UK businesses using Xero more than doubled from 22,000 to 47,000, and globally Xero now has 284,000 customers. Xero’s online accounting software is based entirely in the cloud, providing access to up-to-the-minute data which helps customers get a better understanding of their current financial position, take control of their cash flow, and run their busi-nesses more effectively. The achievements which convinced the judges were the strategic partnerships which the company entered into in the past 12 months. In March 2014, Xero announced a major strategic alliance with Big Four firm KPMG UK. In the same month, it also reached agreement with the UK’s RBS Group for the supply of direct bank feeds for Royal Bank of Scotland and NatWest customers.

AWARdS

■ Praxity team with Association of the Year Award

■ KPMG’s Mark Davies recieving the Audit Innovation of the Year Award

■ HLB CEO Rob Tautges■ Team at Nexia International and its winning firm Ebner Stolz

■ Antea’s chairman Antoni Gomez with IAB’s Vincent Huck

AWARdS

■ RSM team celebrating the Network of the Year Award

■ PwC UK’s Claire Stokes reciving the Advi-sory Firm of the Year Award

■ HLB CEO Rob Tautges ■ Keith Tracey, Aon ■ Three awards for KPMG

■ Antea’s chairman Antoni Gomez with IAB’s Vincent Huck


IAB AwArds International Accounting BulletinAwArds IAB AWARdS

IAB young Accountant of the year 2014

Kader KaneyeIn 2010, at the age of 25, Kader Kaneye was appointed chief executive officer of KMC Niger and became the youngest executive partner in Niger.

After his appointment, he successfully restructured and developed KMC Niger, cre-ating new services lines for accounting, tax and law, and executive training. As a result, the numbers of clients and professional staff are today five times higher than they were four years ago, with clients up from 40 to

200 and staff from 7 to 41. KMC Niger is now ranked among the top three consulting firms in the country.

Through his leadership, Kaneye has addressed prominent local and global issues, such as the promotion of woman in the workplace (women represent more than one-third of the KMC Niger staff and hold key positions), and the promotion of Islamic finance.

Kaneye was recently selected to attend

the summer 2014 Washington Fellowship for Young African Leaders, a new flagship programme of US President Obama’s Young African Leaders Initiative.

Beside his managing position with KMC Niger, Kaneye serves as regional executive partner of HLB KMC West Africa and as the youngest vice-president in the history of the Professional Chartered Accountants Board in Niger (ONECCA Niger).

IAB 2014 Lifetime Achievement Award

Arnold SchilderArnold Schilder became chairman of the International Auditing and Assurance Standards Board (IAASB) in January 2009. Since his appointment, he has played a key role in guiding the IAASB as it strives to enhance the quality and consistency of prac-tice throughout the world. Ninety jurisdic-tions around the world already use or are in the process of adopting or incorporating IAASB’s International Standards on Audit-ing (ISAs). Recently it was announced that as of 2015 Schilder will continue to lead the IAASB for another three-year term.

From 1972 to 1998, Schilder worked with PwC, first in the small and medium-sized entities practice, and since 1985 as an international audit partner.

From 1998 to 2008, Schilder was a

member of the managing board of the Dutch Central Bank, responsible in particular for banking regulation and supervision. In addi-tion, he served as the chair of the Basel Com-mittee on Banking Supervision’s Account-ing Task Force from 1999 to 2006, and as a member of the Public Interest Oversight Board from 2005 to 2008. During 1994 and 1995 he also served as president of the Ned-erlandse Beroepsorganisatie van Account-ants (NBA, formerly Royal NIVRA).

Schilder also served as part-time profes-sor of auditing at the Universities of Amster-dam and Maastricht from 1988 to 2009. He studied theology and accountancy and earned a Ph.D in business economics in 1994 with a thesis on auditor independence.

IAB 2014 Personality of the year

Paul DruckmanOver the past 12 months, Paul Druckman and the International Integrated Reporting Council (IIRC), of which he is chief executive officer, were able to enhance significantly inte-grated thinking in the accountancy industry.

The release of the world’s first-ever inte-grated reporting (<IR>) framework in December 2013, a milestone on the way to broader corporate reporting, has surely been the council’s major achievement.

The principles-based framework aims to communicate concisely how an organisation’s strategy, governance, performance and pros-pects lead to the creation of value in the short, medium and long-term. It’s a promising shot at improving the relationship between com-panies and investors.

Druckman and the IIRC managed to con-vince major companies to pilot the frame-work, and following the framework’s even-tual release, while there’s clearly some way to go towards widespread adoption, more and

more regulators and companies across the globe are now going ‘integrated’.

But the framework’s release has not been the only achievement in the past year. By coop-erating with standard-setters and institutes through MoUs and networks, Druckman and the IIRC continuously strengthened the global discussion about <IR> and broached continuative topics such as assurance on <IR> or <IR> in public sector accounting.

Druckman originally pursued an entrepre-neurial career in the software industry, before entering the financial industry. Prior to his leading role in <IR>, he served, amongst oth-ers, as director of the UK Financial Report-ing Council and as president of the Institute of Chartered Accountants in England and Wales.

As CEO of the IIRC, Paul Druckman has now become the face of <IR> and a principal advocate for transparency and sustainability in finance worldwide.

COUNTRY sURveYInternational Accounting Bulletin


FRANCE

France is in an unusual position within the major Eurozone economies. While the economy displayed considerable resilience through the global financial

crisis, supported by steady private consump-tion, recovery has been slow to take hold as efforts to reduce the government deficit over the past three years and structural impedi-ments (including a loss of external competi-tiveness) created a drag on growth.

The IMF refers to signs of a gradual uptake in economic activity in its latest fore-cast for the country, predicting that France’s economy will expand by 0.7% in 2014 and 1.4% next year, although unemployment is not expected to show an appreciable decline until 2016. The Government’s stability and national reform programme commits to public spending cuts of €50bn over the next three years as it seeks to reduce the deficit and create room for tax cuts.

According to Marc de Premare, interna-tional liaison partner at Crowe Horwath France, the performance of the accounting industry is closely aligned to the French economy in that it did not suffer a strong recession, but it is not heading toward any significant growth in the near term.

“Some of the services are becoming com-modities with significant competition and declining prices,” De Premare says. “On the other hand, value-added services such as per-formance consulting, tax planning and cor-porate finance services are in great demand. As accountants, we see the impact on busi-ness of the lack of strong reforms and we hope further reforms intended by our gov-ernment will happen.”

BKR member firm Exponens partner Jacqueline Wolfovski admits that the past three years have been difficult for the French accounting industry.

“Our deontological (duty-based) code has evolved – for instance, communication and advertising are now allowed as well as different capital structuring for our firms – and there is much political debate on ‘regu-lated professions’, which include statutory auditors and chartered accountants as well as solicitors, lawyers and court clerks. Gen-eration Y is also much different in its work

style than previous generations of account-ants and finally, implementation of new tech-nologies requires significant investment.”

Clients now demand high-level servic e in all aspects of running their business in addition to the traditional services of prepar-ing financial statements, tax returns and pay slips, she continues. “There’s a lot of compe-tition as a new generation of ‘digital natives’ face the massive retirement of an older gen-eration of accountants and auditors. Howev-er, not all firms are ready as it is a transition that requires a significant effort in terms of strategic planning and reorganisation.”

Serge Laviale, founder of MSI member firm Laviale refers to demand from mid-sized companies for advice and consultancy on a wide range of issues, although Bettina Cassegrain (partner and head of audit at HLB member firm Cogep) says the difficult economic situation has highlighted the fact that the accountant remains a pivotal figure for many businesses.

“Taxation and HR/payroll services are in most demand because of the ever-changing legislation,” says Cassegrain. “Very often matters are so complex that especially small entities cannot afford to have an appropri-ately trained person in-house. In the current economic climate it’s very important for the owners of small entities to know how to optimise their tax situation and transfer their business to their children and we can help them to do this in the most efficient way.”

It’s increasingly common for companies to appoint their auditors, advisors or account-ants through tenders and although fees are not necessarily the only selection criteria, tenders nevertheless exert a direct influence on fee levels observes Francois Duhau, presi-dent PKF Ampersand.

More encouragingly, he refers to an increasing role and responsibility in the detection and support of companies facing difficulties. “Our profession is clearly identi-fied as a trusted third party whose expertise is solicited by both companies and regula-tors. From that perspective, we can be opti-mistic as to the development of the industry. For instance, parliament assigned new mis-sions in 2014 to accountants and auditors in

the social area (works council and employ-ers’ organisations).”

Less positive are the changes effected by increased regulation. “As a result, account-ing firms spend lots of time filling in docu-ments to fulfil the legal, tax and social obli-gations of our clients,” says Duhau. “There’s a general feeling that we’re overwhelmed by administrative works with little added-value and don’t have enough time to focus our expertise on high-value tasks. The services in increasing demand are forecasts analysis, assistance in financing operations and com-pliance with new regulatory requirements.”

Yves Sonier, CEO of Nexia member firm Groupe Sefico reckons that in the context of a weak economy, estimates of 2% growth in accounting services over the next 12 months are pretty impressive and will be driven by outsourcing and tax compliance services for large and medium-sized companies and assistance in areas such as consolidation, merger and acquisition and IFRS.

“In the areas of tax and legal service we are in competition with lawyers and advis-ers, but when we have the bookkeeping or the financial statements we always offer the tax and legal review for the company and its directors,” explains Thierry Benyamin, part-ner at Alliott Group member firm 3Apexco.

Although clients really need more advi-sory support, they are hesitant about spend-ing money on such activity adds Stéphane Loubières from MGI member firm FCN. “It can be difficult to convince clients that despite their problems they should come to us for guidance.”

Analysis of the jobs market indicates that recruitment is still high, but significant issues remain according to Michel Leger, managing partner at BDO France. “Revenue growth and margin are low in a very competitive landscape. We see two strategic options: going low cost or trying to differentiate and provide value-added services and relationships. The real competition is for value-added services and advisory: clients are demanding dash-boards and reporting, benchmarks or advice on their specific sector or business issues.”

Most of the firms interviewed by IAB referred to a continuation of the downward

Signs of resilience in a tough economyAfter another year of economic inertia in France, opinion is divided on whether anticipated modest growth in 2014 and 2015 will translate into increased professional activity. Paul Golden reports

COUNTRY sURveY International Accounting Bulletin


FRANCE

pressure on fees highlighted in last year’s report. According to Nexia’s Sonier, the average hourly rate on statutory audits has fallen from €160 to €100 as a result of the Big Four lowering their fees.

It’s a battle to sell accountancy advice at the right price, as clients don’t always see this work as adding value and too often select their accountant on price, adds MGI’s Loubières. “The other problem is getting paid. Our clients first pay their employees (because they have no choice), their materi-als suppliers (otherwise they have nothing to sell) and social contributions and tax (they don’t want to have problem with the state). Then they think that we can wait and they will only pay us when they have spare cash. It’s not acceptable when you consider that 75% of our own expenses are salary and social contributions.”

His firm’s response has been to offer new services while developing a niche strategy. “We have to be considered as a specialist in our sector and not as a generalist firm, but we still have to be able to provide a wide spectrum of services. So we help our employ-ees specialise and train them to obtain expertise in their fields while investing significantly in advanced IT systems to

obtain productivity gains.”Alliott Group’s Benyamin says his firm has

developed new services such as domiciliation as well as playing an active role in organisa-tions such as the Invest in France Agency.

“Steps we have taken to compensate for falling fees include offering a wider service range adapted to each client, increased spe-cialisation and heightened physical pres-ence,” explains Fredy Fritzinger, managing partner HLB Groupe Cofimé.

Firms have to offer additional services which correspond to client needs in order to remain competitive, agrees HLB’s Cas-segrain. “For example, the burden on smaller companies in terms of continuing professional education appears significant and costly at first sight and as a result, not all companies are fully compliant or even aware of their obligations. “We have set up a specialist service with CPE Formation that analyses the continuing professional educa-tion requirements of each firm to ensure they are compliant with relevant employment legislation and processes reimbursements for training costs issued by the government. Clients often do not realise that thanks to these reimbursements they can fulfil their continuing professional education obliga-

tions free of charge or almost free of charge.”BKR’s Wolfovski suggests that falling

profitability is an even more pressing issue for smaller firms in particular. “Clients are keeping our billing rates under scrutiny, but our personnel costs are higher due to the increasing level of social charges on wages. Audit fees for the listed companies of the CAC 40 decreased by 3.8% in fiscal year 2013 as compared to fiscal year 2012.”

There have also been M&As over the last 12 months as firms seek economies of scale. For example, last summer Exponens inte-grated Synergie Audit, a Paris accounting and audit firm employing 20 people.

One of the most interesting issues in the French accounting profession is how mem-bers view EU efforts to reform audit and the possible implications for joint audit.

De Premare says his firm strongly believes in the joint audit model that’s been in place in France for many years. “It’s been one of the drivers of a more open audit market and has helped us maintain our position as joint auditor of some of the largest French com-panies. We think EU audit reform doesn’t do enough to promote joint audits and we fear joint audit will not spread out into other countries in Europe.

■ FRANCE

NETWORKS – FEE DATA

Rank NameFee income

(€m)Growth

rate

Fee split (%)

year-endAudit &

AccountingTax

servicesManagement

consultingCorporate

finance

Corporate recovery/

insolvency Litigation

support other

1 Deloitte* (1) 984.0 10% - - - - - - - May-14

2 KPMG* 894.0 6% 43 - - - - - - Sep-13

3 EY* 778.0 3% 44 - - - - - - Jun-13

4 PwC* (2) 656.0 –5% 63 15 - - - - 22 Jun-13

5 Mazars* 314.0 2% 88 1 5 - - - 6 Aug-13

6 Kreston International* 164.7 19% 80 5 2 2 1 - 10 Oct-13

7 Grant Thornton International* 142.1 2% 80 9 - - - - 11 Sep-13

8 Baker Tilly International* 106.3 0% 66 17 5 - - - 12 Dec-13

9 Crowe Horwath International* 90.6 4% 73 14 3 1 - - 9 Dec-13

10 BDO* 73.2 1% 83 4 1 1 - 1 10 Sep-13

11 RSM International* 64.0 –5% 67 13 17 2 - - 1 Dec-13

12 Nexia International* 54.6 2% 78 6 4 4 - - 8 Jun-14

13 HLB International* 43.5 3% 61 18 7 3 - 4 7 Dec-13

14 PKF International* 41.3 –1% 74 16 8 2 - - - Jun-13

15 Moore Stephens International* 22.0 –5% 64 7 1 5 - 4 19 Dec-13

16 ECOVIS International* 3.4 –4% 60 20 20 - - - - Dec-13

Total revenue/growth 4,431.7 4%

Notes: (e) IAB estimates. Made on the basis of staff growth informtion provided to the IAB. *Disclaimer = Only data from the named member firm or the exclusive member firms within a network/association is included. Data relating to correspondent and non-exclusive member firms is not included. (1) Deloitte organises fee income in the following business lines: audit and consulting generated €560m, accounting services €331m and tax €93m. (2)PwC ‘Other’ includes: management consulting, transactions, strategy.

Source: International Accounting Bulletin



FRANCE

According to MSI’s Laviale, French audi-tors work to defend the domestic model and are attentive to maintaining the appropriate balance between the benefit to companies of the certification of financial statements and the desire to allow small and medium audi-tor firms to continue to exist.

Anne Mouhssine, audit partner at Expon-ens and chair of BKR EMEA audit commit-tee says she’s concerned the EU directives will increase market concentration. “Joint audit is not mandatory in France except for clients with consolidated accounts. The joint audit obligation has not been extended but has been identified as best practice.”

Concerns such as market concentration and the necessity to clarify the role of the auditor (expectation gap) seem necessary and make sense, says Cassegrain at HLB. “It appears the outcome of the reform is a lot more concerned with organisational aspects. Nevertheless, the profession in France approves of the role joint audit and the audit of SMEs have had during the discussions and the outcome shows the French model of joint audit – which has so far been unique – is regarded as viable and leading to improved audit quality.”

“As regards market concentration, there’s a concern mandatory auditor rotation will achieve the opposite of what was intended and in fact increase concentration. Having

said that we’re still awaiting the position of the French Government on this question in particular as European governments have a certain latitude concerning the transposition of the text in each member state.”

Duhau at PFK Ampersand observes that while European audit reform has been much discussed, the Government now has two years to translate the directive into French law so it’s too early to know exactly how it will affect the profession. BDO’s Leger also points out that it’s difficult to be defini-tive about the impact of EU reform in the absence of full implementation details.

“French auditors are very protectionist and don’t want to change the six-year period for the legal audit mandate,” says Benyamin at Alliott Group. “So, if the efforts of the EU are to change the mandate to a one-year period this won’t be accepted in France. On the other hand, joint audit is a French crea-tion so it allows auditors to increase their activities on big-sized firms or in consolidat-ed accounts audit. This has worked for years in France and permits mid-size audit firms to be part of the big audit market.”

French professionals are waiting to see the practical consequences and especially how the European Directive will be turned into French law, adds MGI’s Loubières. “There are various options, but the key point is the

future of the cohabitation of two disciplines (chartered accountant and statutory audi-tor) exercised by the same professionals. The stakes are high in France, just as they are in Germany. For the joint audit question, that’s not a problem for us because we’re used to this in France, as it’s been compulsory for groups with consolidated statements for quite a long time.”

Looking ahead BKR’s Wolfovski express-es confidence in the growth potential of the accounting industry. “Recent legislation is expanding our markets and our mission. In March, a law was published on the financial transparency of work councils’ accounts and we’re optimistic about the possible authori-sation of cash handling on behalf of our cli-ents. We can also get involved in the digital technology arena, shaking up competition and business models to position our profes-sion as a major player.” (In France, a works council or comité d’entreprise is mandatory in any company with 50 employees or more.)

Duhau believes growth in the account-ing industry will rely on increasing deliv-ery of high-value-added services to clients and implementation of new technologies, procedures and behaviour to automate all production processes. “In a world where complexity and regulations are increasing, there’s a need for specialists who can deliver

■ FRANCE

ASSOCIATIONS- FEE DATA

Rank NameFee income

(€m)Growth

rate

Fee split (%)

year-endAudit &

AccountingTax

servicesManagement

consultingCorporate

finance

Corporate recovery/

insolvencyLitigation

support other

1 Praxity* 323.0 3% 88 1 5 - - - 6 n/a

2 PrimeGlobal* 260.0 –3% 59 22 4 2 - 1 12 Mar-14

3 BKR International* 233.0 12% 65 10 10 - - - 15 Dec-13

4 MSI Global Alliance* 67.6 1% 48 49 - 3 - - - Dec-12

5 DFK International* 56.1 10% 78 9 7 3 - 1 2 Sep-13

6 MGI* 47.8 10% - - - - - - - Jun-13

7 EuraAudit International* 32.2 18% 88 1 3 - - - 8 Dec-13

8 GMN International* 14.5 2% 70 10 - 10 - - 10 Sep-13

9 IAPA* 10.3 2% 80 12 - - - - 8 n/a

10 Morison International* 10.0 –3% 88 11 - - 1 - - Dec-13

11 KS International* 8.3 –18% 72 14 1 1 - - 12 Dec-13

12 Alliott Group* 4.9 –10% 90 6 1 - - - 3 Dec-13

13 INPACT International* 4.7 –16% 47 41 9 - - 1 2 Dec-13

14 Integra International* 4.6 10% 60 30 10 - - - - Jun-14

15 A.C.E.E.* 3.4 7% 97 3 - - - - - Dec-13


Notes: *Disclaimer = Only data from the named member firm or the exclusive member firms within a network/association is included. Data relating to correspondent and non-exclusive member firms is not included. Source: International Accounting Bulletin



FRANCE

■ FRANCE

NETWORKS - STAFF DATA

Rank Name

Total staff Growth rate

Partners Professional staff Administrative staff offices

2013 2012 2013 2012 2013 2012 2013 2012 2013 2012

1 Deloitte* 8,986 7,950 13% 513 470 7084 6,230 1389 1,250 225 200

2 KPMG* 8,300 8,000 4% - - - - - - - 217

3 EY* 4,676 5,304 –12% - - - - - - - -

4 PwC* 4,000 4,000 0% - - - - - - 25 25

5 Mazars* 2,740 2,503 9% 157 169 2,230 1,968 353 366 39 38

6 Kreston International* 1,781 1,820 –2% 130 131 1,514 1,550 137 139 99 100

7 Baker Tilly International* 1,520 1,491 2% 132 132 1,213 1,207 175 152 84 84

8 Grant Thornton International* 1,339 1,352 -1% 103 112 1,049 1,065 187 175 22 22

9 Crowe Horwath International* 904 919 –2% 105 107 716 720 83 92 59 69

10 BDO* 815 800 2% 75 73 630 626 110 101 35 35

11 RSM International* 540 540 0% 52 52 443 443 45 45 7 9

12 Nexia International* 524 527 –1% 61 64 406 398 57 65 15 16

13 HLB International* 329 327 1% 33 32 254 250 42 45 36 36

14 PKF International* 306 324 –6% 47 50 235 249 24 25 6 6

15 Moore Stephens* 213 220 –3% 21 21 166 173 26 26 5 5

16 ECOVIS International* 34 35 –3% 3 3 30 31 1 1 2 2

Totals 37,007 36,112 2% 1,432 1,416 15,970 14,910 2,629 2,482 659 864


■ FRANCE

ASSOCIATIONS - STAFF DATA

Rank Name

Total staff Growth rate (%)


2013 2012 2013 2012 2013 2012 2013 2012 2013 2012

1 PrimeGlobal* 3,538 3,340 6% 422 255 2,801 2,876 315 209 198 200

2 Praxity* 2876 2623 10% 166 178 2350 2073 360 372 46 45

3 BKR International* 2,684 2,500 7% 280 260 2,404 2,240 - - 180 170

4 MSI Global Alliance* 1,010 950 6% 120 120 800 780 90 50 75 74

5 MGI* 533 537 -1% 65 68 91 91 377 378 27 26

6 EuraAudit International* 352 332 6% 36 37 292 266 24 29 25 21

7 DFK International* 351 329 7% 36 33 274 257 41 39 18 18

8 GMN International* 175 159 10% 10 11 150 134 15 14 9 9

9 IAPA* 123 122 1% 14 14 40 41 69 67 8 8

10 Morison International* 82 84 -2% 11 12 64 61 7 11 1 1

11 KS International* 80 81 -1% 11 11 59 60 10 10 4 4

12 INPACT International* 52 62 -16% 7 7 40 50 5 5 3 4

13 A.C.E.E.* 48 43 12% 5 5 41 37 2 1 7 7

14 Alliott Group* 47 52 -10% 7 9 34 37 3 6 3 2

15 Integra International* 46 43 7% 4 5 40 35 2 3 1 1

Totals 11,997 11,257 7% 1,194 1,025 9,480 9,038 1,320 1,194 605 590

Notes: *Disclaimer = Only data from the named member firm or the exclusive member firms within a network/association is included. Data relating to correspondent and non-exclusive member firms is not included;Source: International Accounting Bulletin

services to help clients make their lives easi-er.” Fritzinger suggests a crisis of confidence has become entrenched. “Furthermore, the economic measures our politicians haven’t

taken for decades will need to be taken even-tually, which will have an impact on consum-ers’ state of mind. Therefore, the risk is high that the economic situation will remain tense

over the next two or three years.“We’re con-cerned as the economic climate generates our activity, so we’re careful in our decisions and recruitment policy,” concludes Benyamin. <


CouNTRy SuRvEyInternational Accounting Bulletin LATiN AMERiCA

Many are the heroes who popu-late Latin America’s history, but few have left such a long-lasting mark over the whole of the region

as Simón Bolívar.Nicknamed El Libertador, in the early

years of the 1800s Bolívar led to independ-ence from the Spanish empire: Ecuador, Peru, Bolivia, Venezuela and Colombia, which at the time included the country now referred to as Panama. Today he is still quoted and referenced in a lot of the region’s political discourse.

But Bolívar’s vision went beyond inde-pendence; he imagined a unified Latin America under one leadership. To that effect he founded and presided for 11 years over the republic of Gran Colombia which included present-day Colombia, Venezuela, Ecuador, Panama, northern Peru, western Guyana and northwest Brazil.

“If my death contributes to the end of partisanship and the consolidation of the Union, I shall be lowered in peace into my grave,” he once said.

Unfortunately for him, when Bolívar died at the age of 47, his dream of a unified Latin America was far from reality and it would not survive his death. Latin America did gain independence, but in the form of vari-ous countries and autonomous territories, allies one day and foes the next.

However as International Accounting

Bulletin interviews firm leaders from the region for its annual survey, there’s a sense that the Bolívarian dream, while it might not be so at the political level, is still alive on the economic scene.

As the different countries in the region enjoy comfortable level of growth and busi-nesses start to trade across borders it is con-tributing to the growth of accounting net-works and associations in the region.

“In the last 10 years you can’t ignore the importance of Latin America in the global economy,” RSM Latin America regional leader Brendan Quirk explains. “It’s very important to have a strong representation there for global companies. The growth in Latin America of small and medium busi-nesses has provoked an increase in business-es growing inter-regionally, which in turn boosted our growth.”

Regional integrationBaker Tilly International regional director for Latin America Ed Rivera says that the regional integration in Latin America is a trend that’s slowly building over the past decade. “A large part of our clients doing international work do so with neighbour-ing countries,” he says.“So there’s defi-nitely an economic convergence that is geo-graphically driven.”

The opportunities for regional inte-gration through trade come naturally,

Latin American leaders predict modern day gold rushPositive economic indicators, SMEs going international, and accelerated regional economic integration are sources of optimism for accounting firms in Latin America, as vincent huck reports

■ LATiN AMERiCA

At a glanceREvENuE

Most revenue: Deloitte, $1,474.5mLeast revenue: INPACT, $2.3mhighest growth: UC&CS Global, 37%Lowest growth: INPACT, –18%

STAFF

Largest workforce: Deloitte, 20,848Smallest workforce: INPACT, 125

ECoNoMiC iNdiCAToRS

Regional GdP: $6.1trnRegional GdP growth: 3.4%GdP per capita (PPP): $12,818inflation (CPi): 6.1%Current account balance: –1.7%unemployment rate: 6.7%Population: 588m

iAB SuRvERy iNdiCAToRS

Revenue per employee: $55,280Staff density: 1 accountant per 5,642 ppl

Notes: Totals apply to IAB surveyed data only. This includes firms that belong to global networks and associations

Source: International Accounting Bulletin, IMF, World Bank

COUNTRY sURveY International Accounting BulletinLaTiN ameRiCa


Rivera explains. “There’s one language and very similar cultural traditions across Latin America.”

There are actually two languages in Latin America: Spanish and Portuguese, but the latter is only spoken in Brazil. However due to the similarity between both languages a lingua franca has appeared in the region referred to as Portunhol or Portuñol, which freely mixes both Spanish and Portuguese. Some like Quirk jokingly refer to it as the business language in the region.

Economic successesLatin America is one of the regions in the world that has best overcome the 2008 eco-nomic turmoil.As early as 2010 the region was enjoying a GDP annual growth of 5.9% according to the World Bank, and even though this fig-ure has declined year-on-year to reach 2.4% in 2013, it is still the third fastest-growing region in the world behind Eastern Asia and the Pacific and Africa.

Accounting networks and associations made the most of this dynamic to boost

their growth in recent years. In 2013, sur-veyed networks in Latin America saw their revenue increase by an average of 7%, up to $5,354.1m, compared to $5,018.2m in the previous year. Surveyed association equally saw their revenues increase by an average 8% in fiscal year 2013, up to $406.8m.

While interviewed firm leaders say they see opportunity and growth all across the region, some countries or sub-regions have experienced more acute growth than others. This is especially the case in Colombia and Peru, which in recent years have fought a tough battle for the title of fastest-growing economy in Latin America.

Columbia leadsColombia, so far, is leading the race. According to interim data released in June by the National Administrative Depart-ment, Colombia’s GDP grew by 6.4% in the first quarter of the year compared to the same period in 2013, and by 2.3% com-pared to the previous quarter.

Peru’s economy on the other hand grew by 4.8% in the first quarter of 2014

compared to the previous year, below the 6.5% average annual growth rate recorded in the last decade, according to the country’s National Institute of Statistics and Information.

The Peruvian economic slowdown led to political storms as the Congress called for the Peruvian finance minister Luis Miguel Castilla Rubio’s resignation. Meanwhile his Colombian counterpart Mauricio Cárdenas Santa María was reappointed for President Juan Manuel Santos’s second presidential term.

Quirk says that Colombia overtaking Peru as the fastest-growing large economy in the region “speaks very highly of Peru as well as Colombia. Peru has been growing at above 5% for the past 10 years”.

Rivera says Peru’s growth enjoyed less coverage in the media than Colombia’s, but it was equally as impressive.

“Colombia’s economy has grown phe-nomenally and so did our member firms there,” he says.

Crowe Horwath International regional executive Americas Eduardo Pestarino

■ LATiN AMERiCA


Rank NameFee income

(uS$m)Growth

rate

Fee split (%)

year-endAudit &

AccountingTax

servicesManagement

consultingCorporate

finance

Corporate recovery/


support other

1 Deloitte* (e) 1,474.5 6% - - - - - - - May-13

2 PwC* (e) 1,028.0 –1% - - - - - - - Jun-13

3 EY* (e) 910.8 12% Jun-13

4 KPMG* 851.0 5% 53 21 - - - - 26 Sep-13

5 BDO* 194.9 16% 58 16 - - - - 26 Sep-13

6 Grant Thornton* 169.2 16% 47 12 - - - - 41 Sep-13

7 Crowe Horwath International* 96.6 17% 66 19 7 3 - 1 4 Dec-13

8 RSM International* 84.7 11% 64 16 13 - - - 7 Dec-13

9 Moore Stephens International* 77.3 13% 68 19 6 3 - - 4 Dec-13

10 Baker Tilly International* 75.6 7% 59 15 12 7 - - 7 Jun-13

11 SMS Latinoamerica (1) 67.8 5% 47 28 18 1 3 - 3 Dec-13

12 Kreston International* 57.3 10% 52 29 9 2 - - 8 Oct-13

13 Russell Bedford International* 56.9 4% 39 14 24 - - - 23 Jun-13

14 PKF International* 47.7 11% 71 15 7 1 - - 6 Dec-13

15 Nexia International* 46.3 18% 58 16 9 - - 1 16 Jun-13

16 Mazars* 42.2 8% 82 8 5 3 - 1 1 Aug-13

17 HLB International* 32.4 11% 56 12 26 - - 7 Dec-13

18 UHY International* 24.9 29% 49 23 10 2 3 4 10 Dec-13

19 AUREN* 16.0 9% 53 26 12 4 - 3 2 Dec-13


Notes: (e) IAB estimates made on the basis of staff growth informtion provided to the IAB. *Disclaimer = Only data from the named member firm or the exclusive member firms within a network/association is included. Data relating to correspondent and non-exclusive member firms is not included. (1) SMS Latinoamerica’s figures include US$2.5m from correspondent and non-exclusive member firms.


COUNTRY sURveYInternational Accounting Bulletin LaTiN ameRiCa


believes Colombia’s economic boom has also helped the country to rebrand its image on the international scene. While 10 years ago to many outsiders Colombia was seen as the home of the drug trade, it now enjoys a much more positive image with more international investment coming into the country and an increase in the number of businesses created.

“Colombia has changed dramati-cally,” Pestarino says. “And not only in Bogota but in Cali, Medellin and other regions of the country; you feel the uptake of the economy.”

underdog countrySpeaking to IAB sister publication The Accountant , ANTEA chairman and AUREN president Antoni Gomez sum-marises: “This is the story of an underdog country facing drug-related violence, which all of a sudden is known for its extraordi-nary potential.”

On 13 October AUREN will integrate Colombian firm TH&R Consultores y Auditores within its international net-work. The network was already present in the country through ANTEA, an inter-

national association of which it was a founding member.

Gomez said the process of securing a member firm took approximately four years, as finding the right partners which could meet the criteria required to be part of an international network turned out to be a challenge.

“We talked to at least 15 firms that were potentially interested, but many back off when they know about the strict requirements and quality standards required to work within our international network,” he said.

AUREN, which recently joined the Forum of Firms, will have one office in Bogota of around 80 employees, and a sec-ond in Barranquilla, employing five. In the absence of an official ranking, Gomez esti-mated AUREN would be among the top 15 firms in Colombia.

ChileWhile it doesn’t enjoy the same media expo-sure as neighbouring Peru or even Colom-bia, Chile remains a very strong economy in the region. Despite seeing its annual GDP growth drop from 5.4% in 2012 to 4.1%

in 2013, Chile retained its position as the most competitive economy in Latin America according to the World Economic Forum’s Global Competitiveness Report.

“This is thanks to its traditional strengths: a strong institutional set up with low levels of corruption and an efficient government, solid macroeconomic stability with a bal-anced public budget and low levels of public debt,” the report read.

Election yearKPMG South America senior partner David Bunce believes the economic slow-down of 2013 can be attributed to the fact that it was an election year in Chile. Michelle Bachelet was elected with 62% of the votes in the second round of the elec-tion in November 2013. It’s Bachelet sec-ond presidency after occupying the position between 2006 and 2010.

“Because of the new government’s more left-leaning policies there’s a bit of concern which explains the slight slowdown in the economy,” Bunce says. “Still, the economy’s doing quite well and KPMG has managed to grow by 20% in Chile.”

He says KPMG is a late comer to the

■ LATiN AMERiCA

ASSOCIATIONS – FEE DATA

Rank NameFee income

(uS$m)Growth

rate

Fee split (%)

year-endAudit &

AccountingTax

servicesManagement

consultingCorporate

finance

Corporate recovery/


support other

1 Praxity* 51.6 0% 79 11 6 2 - 1 1 n/a

2 UC&CS GLOBAL* 44.8 37% 75 15 10 - - - - Dec-13

3 CPA Associates Internatioal* 40.5 6% 63 22 11 - - - 4 Sep-14

4 KS International* 39.4 3% 21 7 2 3 1 - 67 Dec-13

5 PrimeGlobal* 38.8 –3% 56 21 10 3 - 2 8 May-14

6 DFK International* 35.8 28% 55 15 12 1 1 1 15 Sep-13

7 ANTEA* 32.9 13% 36 16 8 3 1 30 6 Dec-13

8 MGI* 22.6 19% - - - - - - - Jun-13

9 BKR International* 20.0 0% 55 32 - - - - 13 Jun-13

10 Morison International* 19.9 4% 60 25 7 2 - 1 5 Dec-13

11 MSI Global Alliance* 17.8 -13% 84 6 2 - - - 8 Dec-13

12 Integra International* 10.7 11% 65 25 10 - - - - Jun-14

13 GMN International* 9.7 8% 64 23 5 1 - 3 4 Sep-13

14 Abacus Worldwide* 8.3 2% 27 8 13 11 2 17 22 Dec-13

15 IAPA* 7.6 –11% 71 14 8 - - - 7 n/a

16 EuraAudit International 3.9 3% 60 21 10 1 - 5 3 Dec-13

17 INPACT* 2.3 –18% 45 43 4 1 - 1 5 Dec-13

Total revenue/growth 406.8 8%

Notes: *Disclaimer = Only data from the named member firm or the exclusive member firms within a network/association is included. Data relating to correspondent and non-exclusive member firms is not included.Source: International Accounting Bulletin

COUNTRY sURveY International Accounting BulletinLaTiN ameRiCa


Chilean market and is still quite small com-pared to the rest of the Big Four. “But we have been successful in the last few years in growing our market share,” he says.

PanamaA part of Latin America that’s often dis-regarded is Central America. Yet the sub-region, driven by the rise of Panama is gaining importance on the economic stage. According to the World Economic Forum’s Global Competitiveness Report, Panama is the second-most competitive country in the region and the 40th out of the 148 countries ranked in the report.

In the past three years, the country has revamped its infrastructure in order to make the most of its geo-strategic location and is aiming to become a major transport hub for the region. During that time, the govern-ment of Panama has also strengthened the local financial market and addressed social issues such as corruption and crime.

Most notably in 2007 Panama launched an estimated $5.25bn project to expand the

size of the Panama Canal. Expected to be finished by 2016, the project intends to dou-ble the capacity of the canal.

“Panama is getting a lot of mentions as the fastest-growing economy in the region because of the canal and because there’s a lot of financial services and tax incentives in the country,” RSM’s Quirk explains. “They have a tax-free zone and it’s also very stra-tegically located regionally, so a lot of head-quarters in the region are set up in Panama.”

BDO chief executive officer for the Amer-icas Richard Payette believes Central Amer-ica is often wrongly overlooked and is a very interesting sub-region. “We had significant growth there led by our firm in Panama which grew by 33% in the last year,” he says. “There are a lot of economic activities in Panama with the canal building works and it attracts a lot of foreign investments.”

The big two : Brazil and MexicoDespite the emergence of new economic hot spots, in the last year, Latin America’s two largest economies Brazil (GDP of $2.3trn

in 2013) and Mexico (GDP of $1.3trn in 2013) have continued to play an important role in the growth of accounting networks and associations in the region.

“We consider Mexico and Brazil part of the key economic centres of the world,” Pestarino at Crowe Horwath says.

Those two countries play such a key economic role that they can influence the overall performance of a firm in the region. KPMG, for example, has seen its revenue grow by 5% in Latin America in the year to 30 September 2013, but Bunce explains that he expects lesser results in 2014 as the Brazilian economy slows down.

In the first two quarters of 2014, Brazil’s GDP has dropped by 0.1% and 0.2%. Pes-tarino argues that this is due to extraordi-nary circumstances such as the 2014 FIFA World Cup which was hosted in Brazil and the upcoming presidential elections in Octo-ber and November which have impacted the economy. He expects the Brazilian economy to pick up again in 2015.

“There’s a chance the change of

■ LATiN AMERiCA

NETWORKS – STAFF DATA

Rank Name



2013 2012 2013 2012 2013 2012 2013 2012 2013 2012

1 Deloitte* 20,848 19,654 6% - - - - - - - -

2 EY* 18,735 16,698 12%

3 PwC* 12,896 12,236 5% - - - - - - - -

4 KPMG* 10,993 10,501 5% 508 487 8,625 8,191 1,860 1,823 - -

5 BDO* 3,907 3,573 9% 210 187 3,143 2,862 554 524 73 65

6 Grant Thornton* 3,784 3,437 10% 184 204 3,128 2,859 472 374 59 54

7 Crowe Horwath International* 2,701 2,627 3% 176 165 2,179 2,022 346 440 74 60

8 Moore Stephens International* 2,670 2,640 1% 180 175 1,967 2,031 523 434 54 54

9 RSM International* 2,451 2,108 16% 159 162 1,864 1,558 428 388 57 61

10 SMS Latinoamerica* 1,913 1,873 2% 167 162 1,597 1,571 149 140 48 40

11 Kreston International* 1,796 1,755 2% 129 123 1,390 1,323 277 309 68 66

12 Baker Tilly International* 1,742 1,608 8% 160 155 1,313 1,218 269 235 52 50

13 Russell Bedford International* 1,537 1,565 –2% 157 131 1,178 1,280 202 154 48 49

14 Nexia International* 1,371 1,220 12% 123 110 975 895 273 215 53 45

15 PKF International* 1,311 1,402 –6% 111 123 981 1,064 219 215 35 38

16 HLB International* 1,232 1,215 1% 118 120 933 916 181 179 45 48

17 Mazars* 905 950 –5% 27 47 763 779 115 124 20 20

18 UHY International* 882 840 5% 74 74 655 621 153 145 34 35

19 AUREN* 544 537 1% 44 43 443 432 57 62 19 18

Totals 92,218 86,439 7% 2,527 2,468 31,134 29,622 6,078 5,761 739 703


COUNTRY sURveYInternational Accounting Bulletin LaTiN ameRiCa


government in Brazil in the coming months might bring more growth to our firm,” Bunce concurs.

Despite the slowdown in the Brazilian economy Rivera at Baker Tilly says there are still opportunities to be had. “Even though Brazil is a challenging environment because of the current market slowdown, our corporate finance practice has nearly doubled this year,” he says. “Equally in Mexico the introduction of a lot of regula-tory changes brings a lot of opportunities and we have hired top talents to stay ahead of these changes.”

Challenging territoriesAsked which countries are the most chal-lenging in the region, interviewed firm lead-ers all point to Argentina, Venezuela and, to a lesser extent, Ecuador. They highlight the economic difficulties those countries are facing which have sometimes led to politi-cal instabilities.

“Argentina and Venezuela are in a dif-ficult economic situation with very high inflation, chaotic exchange rates and you

find that companies there are trying to sur-vive more than they are trying to grow,” Bunce summarises.

According to him Venezuela is in an even more challenging economic situation than Argentina. At Crowe Horwath Pestarino agrees the situation in Venezuela is worse than in his home country Argentina. “In Argentina the situation is difficult due to the political situation. It’s not so much an economic problem,” he argues. “We’re far from the situation we were in in 2001, but the trend is there and the next year will be difficult.”

The situation results in delays in pay-ments and the recovery of accounts received is getting slower, Pestarino says. Ultimately companies are unwilling to invest and this impacts the economy even more, he argues.

“Our clients are a bit nervous, especially the international ones, about how to repat-riate funds and about their continued profit-ability in the country,” Rivera says. “But it has provided us an opportunity in helping our clients in assessing the situation and understanding how they can continue to

operate in the market, so despite a nervous market we have been able to grow.”

Pestarino shares this optimism saying that crises are always a source of oppor-tunity and you can always grow in a dif-ficult market. “When you are in Europe or North America and you see markets in Latin America with more than 40% inflation rates and devaluations taking place two or three times a year, you might think you can’t work in those conditions,” he says. “But we can and we’re finding opportunities to help our clients. We can offer quality services adapted to the needs of the market at a particular moment and do well as we try to overcome the difficulties.”

uruguay and ParaguayBenefiting from Argentina’s misfortunes, Uruguay and Paraguay have gained more importance in recent years. And most sur-veyed firms have enjoyed strong growth in both countries. Pestarino explains that Uruguay and Paraguay took advantage of the difficulties of their neighbour by passing measures to encourage invest-

■ LATiN AMERiCA

ASSOCIATIONS – STAFF DATA

Rank Name



2013 2012 2013 2012 2013 2012 2013 2012 2013 2012

1 UC&CS GLOBAL* 1,676 2,168 -23% 215 164 1,202 1,614 259 390 113 144

2 CPA Associates International* 1,248 1,287 -3% 126 118 912 957 210 212 49 49

3 PrimeGlobal* 1,116 1,147 -3% 114 115 774 833 228 199 58 53

4 DFK International* 1,063 843 26% 86 71 813 650 164 122 53 41

5 Praxity* 1,032 1,016 2% 37 41 865 830 130 145 31 29

6 MGI* 963 757 27% 106 80 595 432 262 245 38 38

7 ANTEA* 958 808 19% 92 79 760 631 106 98 49 45

8 Morison International* 580 520 12% 65 58 405 364 110 106 23 24

9 BKR International* 578 578 0% 55 55 500 500 23 23 28 28

10 GMN International* 546 520 5% 55 46 420 409 71 65 27 24

11 MSI Global Alliance* 482 688 -30% 41 43 325 499 116 146 13 14

12 KS International* 445 448 -1% 27 31 344 336 74 81 25 24

13 Integra International* 419 449 -7% 43 44 322 325 54 80 25 22

14 IAPA* 373 374 0% 40 41 189 194 144 139 16 15

15 Abacus Worldwide* 205 179 15% 30 24 106 109 69 46 8 8


17 INPACT* 125 171 -27% 20 24 93 129 12 18 9 11

Totals 11,995 12,127 -1% 1,186 1,066 8,752 8,930 2,057 2,139 581 584


CouNTRy SuRvEy International Accounting BulletinLATiN AMERiCA


■ LATiN AMERiCA

FiRM MovEMENTS

NETWoRK/ASSoCiATioN FiRM AddiTioNS, MERGERS & ACQuiSiTioNS

ANTEA Added: KPI (La Paz, Bolivia); FSA Network (Rio de Janeiro, Brazil); HKT (Sao Paulo, Brazil); Barrios & Asociados; Maracaibo (Ecuador)

Baker Tilly international Lost: Alonso Meza (Paraguay)

Bdo Merger: VA Barnwell & Associates (St Vincent and the Grenadines) merged with BDO Eastern Caribbean-St Vincent (Kingstown)

Added: Anguilla, St Kitts & Nevis, Montserrat: BDO LLC (formerly KPMG LLC) (Maico)

CPA Associates international Added: Orplan Auditores Independentes (Belo Horizonte, Brazil); C.P.& A. , S.C. (Monterrey, Nuevo León, México)

Lost: Protasio Guerra y Asociados (Matamoros, Tamaulipas, Mexico)

Crowe horwath international Added: C. Descalzo y Asociados (Asuncion, Paraguay); Crowe Horwath Nicaragua (Managua, Nicaragua); Stavros Moyal y Asociados (Montevideo, Uruguay)

dFK international Added: LPG (Puerto Rico); Strategies & Solutions (Quito, Ecuador); Krypton Serviços Contábeis (Belo Horizonte, Brazil)

EuraAudit international Added: Globus services (Panama)

Grant Thornton international Merger: HLB FAST & ABS Auditores y Consultores, Ex Baker Tilly Alonso Meza, S.s.

Added: Bareto & Associates (Dominican Republic), PwC’s Eastern Caribbean Group

hLB international Added: Penalosa Auditores & Asociados (Colombia); Parissi CPA (Puerto Rico)

Lost: HLB Fortin Lagos & Asociados (Honduras)

integra international Added: Verdus Auditores (Rio de Janeiro); Salgado Contatdore (Guadalajara)

Lost: SM Asociados (Santa Dominica)

Kreston international Added: b2 finance (Brazil)

KS international Added: AG Accounting & Consulting (Panama, Republic of Panama)

Mazars Acquisition: Domínio Assessores (Brazil)

GMV Asociados (Mexicali, Mexico) became a direct Mazars office.

Moore Stephens international Limited Added: Servicios Integrales de Auditoria, S.C. (Leon, Mexico)

Morison international Added: Cañon & Cañon (Bogota, Colombia)

Lost: Hansen Holm & Co (Guayaquil, Ecuador)

MGi Added: AFE Internacional SA de CV (El Salvador); ViaConsultoria SAS (Colombia); Arguelles Auditores & Asociados SA (Colombia)

MSi Global Alliance Added: Lores Budiño y Compañia S.C. (Mexico City)

Lost: Tejeda Martinez & Asociados (Dominican Republic), Rivero Hernandez & Asociados Cont. Pub., SC (Mexico City)

PKF international Added: PKF NK Brazil

Lost: Directa Brazil

Praxity Lost: Penalosa Auditores & Asociados (Bogota, Colombia)

RSM international Added: RSM Panama (Marbella, Panama); RSM Dominica (Santo Domingo, Dominican Republic)

Lost: De Levante y Asociados (Panama City)

Russell Bedford international Added: Organización Descom (Veracruz, Mexico) and VGE Contadores y Asesores Fiscales (Cd. Juárez, Mexico)

Lost: Stavros Moyal y Asoc. (Montevideo, Uruguay)

SMS LATiNoAMÉRiCA Added: MG Consulting Group (Panamá); Cavazos Asesores y Consultores (Monterrey, México); Quijivix, Alonso y Asociados (Guatemala, Quetzaltenango); Nardon, Nasi y Asociados (Porto Alegre, Brazil);

Estudio Belgrano (Argentina: Corrientes, Corrientes); Estudio Ricome y Asociados (Santa Fe, Venado Tuerto); KMP Gestión (Buenos Aires, Mar del Plata)

uC&CS GLoBAL Added: Cca Continuity Auditores Independentes (Sao Paulo, Brazil); Chaverri y Compania de Centroamerica (San Josè, Costa Rica); Ramirez y asociados (Lima, Peru); Escobar Consulting & Associates (Mèxico, D. F. and Monterrey, Nùevo Leòn, Mèxico); Leix JM Actuarios Asociados Mèxico (D. F., Pèrez Colìn, Aviles, Vazquez y Asociados, Mèxico); Rubio Fernàndez y Asociados (Mèxico) Yustis Malagòn y Asociados (Mèxico)

Lost: Apaez Melchor Otero (Mèxico)

uhy international Lost: UHY Audit & Advisory Services Cía Ltda (Quito, Ecuador)


CouNTRy SuRvEyInternational Accounting Bulletin LATiN AMERiCA


ments and attract Argentinean investors to their countries.

As a result Crowe Howarth International added a member firm in Uruguay where they were not present before. “Uruguay and Paraguay were mainly served from Argen-tina,” Pestarino explains.

In terms of services lines, interviewed firm leaders say their respective firms have performed well across the board, even if the traditional services (audit and tax) are fac-ing increased challenges.

“There’s no difference from the rest of the world,” Pestarino says. “With an increase in regulation and fierce competition in the fees, it’s sometimes difficult to combine the decreasing fees with the increased costs of compliance due to regulatory changes.”

Fee pressureRivera says that despite gaining new clients and increasing the number of engagements, Baker Tilly International has experienced a slight decrease in audit due to fee pressure. “Because of tough competition in the mar-ketplace, our clients are seeing an opportu-nity to ask for reduced fees in the bidding process,” he explains.

Rivera also points at the way audit is per-ceived in the region as a challenge for firms. “Accounting regulations and information traditionally have been linked with compli-ance for tax purposes and therefore there’s a tick-off, checklist approach,” he says.

“But in the last five years, as Latin American markets connect to the global economy and there’s a convergence towards international standards, accounting infor-mation became more useful to investors and managers rather than the compliance approach,” he continues.

Payette at BDO agrees: “The big trend in audit is more demand to ensure that the value of the audit is enhanced, to get great-er insights on what’s happening through assurance on non-financial information for example. There’s also a greater responsibil-ity on auditors for fraud detection.”

BDO has grown in all service lines, with audit and accounting making 57% of the network’s revenues in the region, tax 16%, and advisory 26%, according to Payette.

Bunce says KPMG has also grown in audit in Latin America thanks to the net-work gaining new clients in Brazil in the past year. “In 2013 we won a series of important new clients in Brazil such as Vale,

the major Brazilian mining company, and Eletrobras one of the leading electricity sup-pliers,” he explains. “At the same time we didn’t lose any existing clients and that’s the reason we’re growing in audit.”

Bunce believes audit is in a better posi-tion in Latin America than in Europe or the US. Because the economy is growing and companies are getting bigger, he believes the opportunities in audit will only increase.

“But also audit is a product that has some-where to go in terms of market demand in Latin America,” he adds, referring to the fact that still very few companies in the region are required by law to undergo an audit. “So we still look at audit as a growth business in this part of the world.”

Most interviewed firm leaders believe that at the moment and in the coming years most of the opportunities for their firms will be in advisory.

“There’s a temporary shift towards advi-sory because the local economies are catch-ing up with the demands of the global econ-omy and of the multinational companies,” Quirk at RSM explains. “The growing small and medium businesses are in need of upgrades in terms of policies and how to keep up with global trends and topics such as IFRS implementation.”

Payette says advisory already accounts for 26% of BDO’s revenues in Latin America. “We concentrate our efforts on a certain number of services which are core issues to the economic and financial life of our cli-ents, like outsourcing, corporate finance and transaction, financial risk manage-ment, and technology advisory,” he says.

Pestarino explains that the services in demand vary according to the needs of indi-vidual countries.

“But the most demanded ones have to do with risk: internal audit, anti-money laundering, governance of the company,” he says. “In countries where the economy is doing well, there are a lot of oppor-tunities in corporate finance, due dil-igence and M&A.”

In other countries, Pestarino says, sus-tainability and Integrated Reporting (<IR>) is a growing trend.

Rivera says Baker Tilly International has moved away from audit to focus on advisory services to help its clients position them-selves for international growth and help them deal with new market regulations.

“In the coming years we will continue to

focus on helping our clients strategically, helping them in services beyond traditional compliance services,” he says. “For that pur-pose the network will invest to develop its internal audit and tax advisory service lines for clients developing a regional strategy.”

As the regional integration continues in 2015, Payette predicts “a significant consolidation in the market as clients will be looking for businesses that have a greater insight in the sector of activity in which they operate”.

Quirk at RSM believes the consolidation will mainly impact the small local account-ing firms which are not part of international networks or associations. “As the region gets more globally integrated the consoli-dation in the lower tier of accounting firms will be driven by the demands of companies in advanced technology as well as increased regulation and oversight,” he says.

Bright years aheadAll interviewed firm leaders agree that their organisations face bright years ahead in the region as all the economic indicators are positive for the short and medium term.

“The region will continue to grow,” Rivera summarises. “And it is shifting to a domestic-driven growth rather than the commodity and export growth that they have seen in the last decade.”

While Europe and North America con-tinue to struggle to reach a stable level of economic recovery, the constant growth in Latin America will certainly attract more Western investors and multinationals in the future, a sort of modern day gold rush.

The Americas have gone through quite a few gold rushes since Columbus set foot in this part of the world in 1492. Few of those gold rushes have benefited the region, espe-cially in South America, as John Steinbeck wrote in East of Eden: “Then the hard, dry Spaniards came exploring through, greedy and realistic, and their greed was for gold or God. They collected souls as they collected jewels. They gathered mountains and val-leys, rivers and whole horizons, the way a man might now gain title to building lots.”

But this time around, European business-men who dare to invest in Latin America will be entering sovereign countries and competing on a level playing field with national and international peers, a situa-tion accounting firms intend to use to their best advantage. <


CouNTRy SuRvEy International Accounting BulletinNEThERLANdS

Legislators and industry associations continue to explore changes to the accounting industry in the Nether-lands. The amendments to the audit

process that kicked in last year and new ethics and independence requirements have formed part of a broader discussion of the future of the accounting profession.

The next milestone in this process is the publication of the Future Accountant Occu-pation Group’s report, expected in late Sep-tember. The Future Accountant Occupa-tion Group is a working group comprised of firms and accountants which has, over the past few months, held debates and dis-cussions with various industry stakeholders.

The objective of this group is to help inform proposals that will improve the quality and independence of the services delivered by the accounting profession. The public debate that will follow the publica-tion of the report is likely to be quite lively according to Ted Verkade, a managing director of Baker Tilly Berk, who refers to a lack of trust in the accounting profession in the Netherlands following the credit crunch that has been fuelled by criticism from the country’s Authority for the Financial Markets (AFM).

“There is severe political pressure on the profession, which has been urged by the Ministry of Finance to take credible steps to restore confidence,” says Verkade.

“This autumn the ministry will evaluate the implementation of the EU 8th Directive and a study is being undertaken on the effec-tiveness of the regulations. In addition, the AFM is expected to publish its inspection reports on the Big Four.”

Verkade warns that if the Ministry of Finance considers the steps proposed by the profession to restore confidence to be inade-quate or insufficient, additional regulations will be imposed.

Kees Teeuwissen, chairman of Kreston International member firm Lentink Audit agrees with this assessment. “Parliament has promised that if sufficient steps are not taken it could decide, for example, to appoint auditors as a kind of civil servant with limitations on income and the type of work that could be done. It also proposed stronger governance by appointing a non-audit professional as the management part-ner and appointing a supervisory board to audit firms exceeding a certain size.”

The debate on the position of the audi-tor in society could lead to a discussion on whether the audit profession should become a government service, adds Marcel Welsink, a partner at Grant Thornton Netherlands. “This would involve questions such as ‘who should appoint the auditor?’ and ‘what should be the charge for the services provid-ed?’ and could result in a major change in the business model of the audit profession.”

Unsettled times continue for Dutch professionDespite high-profile developments on audit reform, the shakeout of the Dutch accounting profession is far from complete. Paul Golden reports

■ NEThERLANdS

At a glanceREvENuE

Most revenue: PwC, €663.8mLeast revenue: EuraAudit Int., €1.7mhighest growth: Crowe Horwath, 375%Lowest growth: Kreston Int, –21%

STAFF

Largest workforce: Deloitte, 4,341Smallest workforce: KS International, 20Most partners: PwC, 261Most offices: BKR International, 71

ECoNoMiC iNdiCAToRS

National GdP: €608.6bnNational GdP growth: –0.5%GdP per capita (PPP): $42,493inflation (CPi): 2.8%Current account balance: 8.7% of GDPunemployment rate: 6.2%Population: 16.8m

IAB SuRvERy iNdiCAToRS

Revenue per employee: €132,604Staff density: 1 accountant per 602 ppl

Notes: Totals apply to IAB surveyed data only. This includes firms that belong to global networks and associations.

Source: International Accounting Bulletin, IMF



NEThERLANdS

Jean Bloemers, member of the board of directors at HLB Van Daal & Partners says there are a number of other issues affecting the sector.

“One of these issues is the interpretation of ‘going concern’,” says Bloemers. The pub-lic and the regulator do not interpret this as accounting firms traditionally do – the pub-lic sees auditors’ opinion as a guarantee for the going concern of at least a year; auditors see it as an assumption for drawing up the figures. Auditors need to adjust to this new environment.”

Other issues include client acceptance procedures (which are becoming ever-stricter) and fraud, he continues. “The pub-lic expects auditors to detect fraud, but in our audit procedures we only focus on lim-ited kinds of fraud and only if they are of substantial scale. For example, conspiracy is excluded. The public does not accept this and we need to understand this.”

In the meantime, accounting firms are grappling with a still-sluggish economy and ongoing fee pressure. “After the audit market was regulated, we entered a reces-sion that decreased the demand for com-

pliance accounting services such as audit, accounting, bookkeeping and payroll, while companies demanded more transparency on fee structures from audit firms,” explains Johan Daams, managing partner at Crowe Horwath Foederer.

The result was (and is) pressure on fees with rates decreasing. “Over the last five years the accounting market has contracted – in 2013 it shrank by around 2% and a further 1% decline is expected in 2014,” adds Daams. “Although there is an increas-ing demand for advisory services; it’s not enough to compensate for the loss of volume in compliance services.”

These figures tally with the view of Roger Kalberg, auditor at MSI Global Alliance member firm deWaardKramer, who says IT has made accounting even more of a com-modity from a client point of view. Kalberg says: “Pressure on efficiency and client requirements for on-demand and often cus-tomised information means firms need to invest heavily in IT and training, leading to lower profit margins and revenue erosion. An increase in ad hoc assignments (often because of demand from credit institutions)

and requests for delivery of annual accounts shortly after year-end impacts the low sea-son especially.”

He believes the drop in revenue for tra-ditional accounting services is not yet fully offset by expansion of other revenue streams, such as advisory services, at least not in small firms or the smaller mid-sized firms, but also refers to increased requests for audit tenders, usually from companies with a Big Four office as incumbent auditor.

Client demandAccording to Sander Brouwer, a partner at Morison International member firm DHW International, customers are looking for more real time management information. He says fee pressure has eased as clients appreciate what they have to pay for ser-vices and the economy begins to stabilise.

“Our role is becoming more advisory than looking at last year’s figures and cli-ents are prepared to pay for good advice,” Brouwer says. “They can see an end to the economic downturn, so we expect to see growth in advisory services this year.”

Fellow Morison International member

■ NEThERLANdS


Rank NameFee income

(€m)Growth

rate

Fee split (%)

year-endAudit &

AccountingTax

servicesManagement

consultingCorporate

finance

Corporate recovery/


support other

1 PwC* 663.8 –4% 45 34 21 - - - - Jun-13

2 EY* 634.9 1% 43 35 19 - - - 3 Jun-13

3 Deloitte* 631.0 –1% 44 26 23 - - - 7 May-13

4 KPMG* 471.1 –6% 54 44 - - - - 3 Sep-13

5 BDO* 229.9 8% 67 27 2 1 - - 3 Dec-13

6 Moore Stephens International* 106.3 –4% 72 17 - 2 - - 9 Dec-13

7 Baker Tilly International* 83.2 –3% 63 27 6 2 - - 2 Dec-13

8 Nexia International* 74.7 –2% 65 18 8 1 - 3 5 Jun-13

9 Mazars* 72.1 0% 72 26 2 - - - - Aug-13

10 Grant Thornton International* 51.0 1% 61 26 - 7 1 - 5 Dec-13

11 RSM Netherlands* 40.3 –4% 55 41 - - - - 4 Dec-13

12 Crowe Horwath International 37.1 375% 46 14 12 1 - - 27 Dec-13

13 HLB International* 35.5 –6% 54 22 13 1 - - 10 Dec-13

14 Kreston International* 33.1 –21% 58 21 6 3 2 - 10 Oct-13

15 ECOVIS International* 20.0 11% 67 19 6 3 - 5 - Dec-13

16 PKF International* 19.5 –4% 47 40 - - - - 13 Dec-13

17 AUREN* 7.1 8% 67 14 9 5 3 - 2 Dec-13

Total revenue/growth 3,210.6 –1%




NEThERLANdS

firm Hoek en Blok partner Kemal Acar expects the weak Dutch economy to affect the profession throughout 2014, although he suggests that most of the pain will be felt by the largest firms.

Diana Clement, a partner at Alliott Group member firm Borrie also sees oppor-tunities for mid-sized firms in the division of audit and advisory services, observing that rotation has led to more attention on quality and the input of the lead audit partner.

Despite the fact that rates are under pressure, it’s still possible to make good margins, says Edzo van den Berg, part-ner at MGI member firm Verstegen. “The industry is exploring the possibilities to expand and deepen the advisory function. At the same time it’s essential to increase efficiency regarding basic processes such as administration and the preparation of doc-uments such as financial statements and tax returns.”

In the Netherlands there’s a need for high-quality consultancy regarding financial and tax issues, he continues. “Financial and tax regulation becomes more and more complex, which increases the potential risks for entrepreneurs. Consultancy skills

throughout the whole organisation will be crucial in the near future.”

At Baker Tilly Berk, Verkade refers to an industry in transition. “With regard to audit we’re facing heavy regulatory pres-sure and tightened independence require-ments,” he says. “Traditional services such as compilation and tax return preparation are declining due to advanced IT solutions, standardisation and administrative burden relief and the economic decline of recent years has heightened competition, creating significant fee pressure.”

He says his firm has experienced increased demand for tax advisory services, par-ticularly indirect tax, transfer pricing and international tax advice. “Another notable growth area is IT consulting, including cyber security. Competition generally is fierce as all firms are shifting their focus to those value-added services. M&A activity is well below the normal level. We have expe-rienced several occasions where acquisition candidates have unrealistic expectations about price – once they are back with their feet on the ground they decide to wait for better times.”

The markets demand that the accounting industry plays a role as a strategic advisor to

companies, which requires industry-specific knowledge, adds Daams at Crowe Horwath Foederer. “Services such as IT and HR are increasingly important, next to corporate finance and mergers and acquisition work. Competition varies depending on the com-plexity of the work – accounting firms that demonstrate above-average knowledge of an industry and/or show specific technical skills will stand out from those that rely on compliance services.”

So far, the large and mid-size firms seem to be the ones that are able to invest in these service lines and knowledge, Daams contin-ues. “Success between those firms is deter-mined by being able to hire the right staff for the job. The ability to attract quality staff will be a major issue in the near future – an interesting fact is that a few firms have begun hiring lawyers or making acquisi-tions that relate to legal services.”

In June, Crowe Horwath Foederer acquired Amsterdam-based De Keijzer Nipius & Co. The merged entity has 350 employees in the Netherlands.

Daams is cautiously optimistic that the Dutch economy will improve in the medium to long term and expects the vol-ume in accounting services to be affected

■ NEThERLANdS

ASSOCIATIONS – FEE DATA

Rank Fee income

(€m)Growth

rate

Fee split (%)

year-endAudit &

AccountingTax

servicesManagement

consultingCorporate

finance

Corporate recovery/


support other

1 BKR International* 158.6 0% - - - - - - - Dec-13

2 CPA Associates International* 115.2 –3% 56.9 24.7 4.7 1.7 - 0.4 11.6 Dec-13

3 Praxity* 72.1 0% 72 26 2 - - - - Aug-13

4 PrimeGlobal* 56.8 –4% 59 22 6 2 - - 11 May-14

5 MGI 24.6 66% - - - - - - - Jun-13

6 Morison International* 20.0 2% 55 14 4 5 2 4 16 Dec-13

7 MSI Global Alliance 12.3 –9% 67 20 12 - - - 1 Dec-13

8 Alliott Group* 10.4 –13% 55 30 11 2 - 1 1 Dec-13

9 Antea* 8.7 7% 70 15 8 4 2 - 1 Dec-13

10 Integra International* 5.7 –15% 50 35 15 - - - - Mar-14

11 INPACT International* 3.7 –9% 70 18 12 - - - - Dec-13

12 GMN International* 2.5 –3% 60 21 13 - - 6 - Dec-13

13 Abacus Worldwide* 2.1 6% 30 33 5 - 14 - 18 Dec-13

14 KS International* 1.8 3% 45 30 15 10 - - - Dec-13

15 EuraAudit International* 1.7 6% 6 44 - - - - 50 Dec-13

Total revenue/growth 496.2 0%

Notes:. *Disclaimer = Only data from the named member firm or the exclusive member firms within a network/association is included. Data relating to correspondent and non-exclusive member firms is not included.Source: International Accounting Bulletin.



NEThERLANdS

■ NEThERLANdS

NETWORKS – STAFF DATA

Rank Name



2013 2012 2013 2012 2013 2012 2013 2012 2013 2012

1 Deloitte* 4,341 4,475 –3% 242 246 3,230 3,340 869 889 21 21

2 PwC* 4,292 4,462 –4% 261 268 3,180 3,323 851 872 12 12

3 EY* 3,625 3,811 –5% 226 232 2,654 2,748 745 831 15 15

4 KPMG* 3,131 3,227 –3% 167 184 2,339 2,429 625 664 10 11

5 BDO* 2,093 1,964 7% 82 74 1,583 1,481 428 409 29 27

6 Moore Stephens International* 1,025 1,060 –3% 70 63 824 871 131 126 30 31

7 Nexia International* 765 739 4% 59 56 573 550 133 133 20 20

8 Mazars* 679 689 –1% 49 51 473 479 157 159 10 11

9 Baker Tilly International* 642 674 –5% 45 44 486 513 111 117 18 18

10 Grant Thornton International* 470 522 –10% 48 50 320 361 102 111 9 8

11 Crowe Horwath International* 377 93 305% 34 6 320 77 23 10 13 3

12 HLB International* 374 349 7% 33 33 305 241 36 75 17 15

13 RSM Netherlands* 349 425 –18% 30 30 251 335 68 60 10 10

14 Kreston International* 304 852 –64% 27 68 225 606 52 178 10 25

15 ECOVIS International* 209 202 3% 17 18 158 150 34 34 12 10

16 PKF International* 157 157 0% 20 18 125 127 12 12 4 4

17 AUREN* 76 82 –7% 4 3 66 69 6 10 2 1

Totals 22,909 23,783 –4% 1,414 1,444 17,112 17,700 4,383 4,690 242 242


■ NEThERLANdS

ASSOCIATIONS – STAFF DATA

Rank Name



2013 2012 2013 2012 2013 2012 2013 2012 2013 2012

1 BKR International* 1,598 1,675 –5% 2 2 1,596 1,673 - - 71 71

2 CPA Associates International Inc. 1,270 1,276 0% 64 63 1,099 1,095 107 118 44 48

3 Praxity* 679 689 –1% 49 51 473 479 157 159 10 11

4 PrimeGlobal* 625 611 2% 47 54 499 447 79 110 17 18

5 Morison International* 214 208 3% 28 29 163 164 23 15 6 7

6 MGI* 182 120 52% 16 10 79 25 87 85 11 2

7 MSI Global Alliance* 124 143 –13% 16 18 94 109 14 16 2 2

8 Antea* 90 96 –6% 6 5 77 80 7 11 3 2

9 Alliott Group* 78 93 –16% 9 10 56 67 13 16 2 3

10 Integra International* 47 51 –8% 8 8 33 37 6 6 1 1

11 INPACT International* 44 53 –17% 5 5 33 38 6 10 2 2

12 GMN International* 29 31 –6% 3 3 20 22 6 6 1 1

13 Abacus Worldwide* 23 22 5% 2 2 18 18 3 2 1 1


15 KS International* 20 19 5% 4 4 15 14 1 1 2 2

Totals 5,045 5,101 –1% 262 265 4,271 4,278 512 558 175 172

Notes: *Disclaimer = Only data from the named member firm or the exclusive member firms within a network/association is included. Data relating to correspondent and non-exclusive member firms is not includedSource: International Accounting Bulletin



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by continuous development in automation, digitalisation and standardisation.

“Compliance services will be most affected and advisory services will become increas-ingly important. Companies will seek firms that are able to provide compliance services in a very effective and efficient manner and com-bine these with high-quality advisory services for an acceptable fee. In the case of statutory audits, the market needs to determine how to provide these services while meeting inde-pendence requirements.”

Sparring partnersAccording to Morison’s Acar there’s been a sizeable increase in the number of companies looking for a ‘sparring partner’ on topics such as tax, legal, finance, internal control, takeo-ver, financial planning, prospective informa-tion and reporting, although Kalberg at MSI Global Alliance accepts that non-accounting firms also have considerable experience in handling these types of requests.

At HLB Van Daal & Partners, Bloemers also uses the word “transition” to describe the state of the accounting industry in the Netherlands. “International services regard-ing tax advice and payroll, as well as interna-tional audits are in high demand and there are only a few networks that can really provide these services to a high standard,” he says.

“We’re optimistic about future economic prospects, but that situation might change if the issues in Eastern Europe are not solved in a diplomatic way. The size of the market for accounting services will not grow, but there will be movement between services. We expect services related to IT – for example, data mining and online services – to grow

rapidly. Firms ready for this change will grow; others will shrink.”

In the Netherlands there’s a general opinion that the accountancy profession has partly lost its standing through some unfortunate developments with some Big Four firms both abroad and in the Netherlands, as well as by the conclusions of the AFM with respect to the quality of audit, says Kreston’s Teeuwissen.

“We expect accounting firm fees to con-tinue to fall, mostly caused by the public positioning of auditors as less trustworthy, less excellent and too profitable,” he says. “Increasing impact of IT on our services will cause a shakeout among smaller firms and provide chances for mid-sized firms to introduce new kinds of services, such as con-tinuous monitoring and business intelligence services. We also expect IT audit activity to increase as part of audit services.”

In the statutory audit market there remains a demand for services, says Welsink at Grant Thornton. “In the market for public interest companies, competition is still too limited and mainly concentrated within the Big Four. In other services like tax, outsourcing and advisory there’s more competition. In the ser-vice industry growth is still negative and we are not expecting that this will change in the near future.”

As a member of a mid-tier firm Welsink anticipates that in the longer run he will see more results from the current legislation on audit rotation and non-audit services. “We expect that for non-audit services the market will change more rapidly than for audit ser-vices,” he concludes. “Therefore we believe that most growth will come from advisory services.” <

■ NEThERLANdS

FiRM MovEMENTS

NETWoRK/ASSoCiATioN FiRM AddiTioNS, MERGERS & ACQuiSiTioNS

AuREN Merger: Square Accountants (Amsterdam)

Bdo Acquired: HLB Schippers (Alkmaar, Amersfoort, Amsterdam, Den Helder)

Crowe horwath international Added: Accountantskantoor Foederer B.V. (Eindhoven)

dFK international Lost: Accountantskantoor Foederer B.V. (Eindhoven)

ECoviS international Added: Avant Accountants (Oudewater)

EuraAudit international Added: IUS Statutory Audits (Amsterdam)

Grant Thornton international Merger: ConQuaestor (Utrecht)

hLB international M&A: HLB Kallen Raeven (Geleen), Kompaan Accountants (Veghel), HLB Van Daal & Partners (Breda, Den Bosch, Dongen, Gemert, Oss, Schijndel, Tilburg, Uden, Veghel, Waalwijk)

Kreston international Lost: BOL Accountants (Boxmeer), Van Oers Accountants (Breda), BAAT (Heerlen)

MGi Added: B&P Accountants (Amsterdam)

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AAt WealthInsight’s core is our proprietary HNWI Database of the world’s wealthiest individuals. Around this database we have built a number of valuable research based products and services that make WealthInsight much more than just a rich contact list.

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