Strategic Intelligence for CFOs, Finance Directors, Controllers and Treasurers in Asia  | 
2012, May 23

Meet the Planet's New Top Accounting Firm

Home > Features > Meet the Planet's New Top Accounting Firm
Features

Meet the Planet's New Top Accounting Firm

by Cesar Bacani, 14 January 2011
topics:
Metrics
tags:
Deloitte Ernst & Young financial performance KPMG PwC revenues

Our friends over at Big4.com has just released their annual report on the performance of the world’s Big Four accounting firms – Deloitte, Ernst & Young, KPMG and PricewaterhouseCoopers – and it makes for very interesting reading.

 
First off, for those into sizing, the planet has a new champion. It’s Deloitte, which was in second place in revenues in 2009. This time around, the UK firm nabbed the top spot with billings of US$26.578 billion. PwC, the biggest accounting firm in 2009, came in second with US$26.569 billion.
 
As in 2009, though, the difference between Deloitte and PwC was paper thin – just US$9 million. The positions can well be reversed again this year, if PwC manages to grow revenues faster than its rival. Deloitte’s sales expanded by 1.9% in 2010, compared with PwC’s 1.5% growth.
 
The gap between the top two and Ernst & Young and KPMG is much larger. Third-ranked E&Y reported revenues of US$21.2 billion (2009: US$21.4 billion, for third place as well), more than US$5 billion behind PwC. Bringing up the rear is KPMG with US$20.7 billion (2009: US$20.1 billion).
 
However, at nearly 3%, KPMG grew the top line much faster than the other three firms. Its expansion was certainly faster than Ernst & Young, whose revenues contracted by 0.9%.
 
A disclaimer is in order. KPMG’s financial year ends on September 30 while E&Y’s ends three months earlier, on June 30. “In 2010, this small difference in fiscal year-ends resulted in relatively higher impact for KPMG, which enjoyed three to five additional months of better economic conditions,” explains the report. It is possible that the difference between KPMG and E&Y may be larger if their fiscal year had ended on the same month.
 
Future of E&Y
Going forward, the question for Ernst & Young is the impact, if any, of the lawsuits that have been brought against it in connection with the bankruptcy of Lehman Brothers in 2008. The world’s No. 3 accounting firm is facing three suits in the U.S., the latest being a December 21 complaint by the New York State Attorney General for alleged accounting fraud.
 
In the UK, the Accountancy and Actuarial Discipline Board opened an investigation in October last year on Ernst & Young’s conduct in relation to the preparation of a report to the Financial Services Authority “in respect of Lehman Brothers International (Europe)’s compliance with the FSA’s Client Asset Rules for the year ended 30th November 2007.”
 
Will E&Y take a hit to its reputation and lose business because of its legal and regulatory problems? It’s difficult to tell, at this point. While it is the only one of the Big Four that saw revenues decrease in both local-currency and dollar terms from fiscal year 2009 to 2010 (US$21.4 billion vs. US$21.2 billion), Ernst & Young reported a 5.3% rise in revenues in January to June 2010 over the same period in 2009.
 
According to the Big4.com analysis, E&Y billings were up 13.3% for advisory services and 9.4% for transaction advisory services, “due to improved business confidence and an increase in corporate activity.” Revenues from assurance increased modestly “due to continued pricing pressure but more than offset by an increase in audit market share and an increase in work from existing clients.”
 
It will be interesting to see this time next year how Ernst & Young had performed in 2011. The atmospherics of the Lehman scandal and the need to defend itself can prove to be a distraction to the firm. There can also be monetary consequences, depending on the actual outcome of the legal cases and regulatory inquiry.        
      
12next ›last »


Related articles

Comment on this article

The content of this field is kept private and will not be shown publicly.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Allowed HTML tags: <a> <em> <strong> <cite> <code> <ul> <ol> <li> <dl> <dt> <dd> <a> <p> <span> <div> <h1> <h2> <h3> <h4> <h5> <h6> <img> <img /> <map> <area> <hr> <br> <br /> <ul> <ol> <li> <dl> <dt> <dd> <table> <tr> <td> <em> <b> <u> <i> <strong> <font> <del> <ins> <sub> <sup> <quote> <blockquote> <pre> <address> <code> <cite> <embed> <object> <strike> <caption>
  • Lines and paragraphs break automatically.
  • Use <!--pagebreak--> to create page breaks.

More information about formatting options

Verification Code
This question is for testing whether you are a human visitor and to prevent automated spam submissions.

Accounting and Regulations

CFO innovation Asia Accounting and Regulation the Asia Pacific resource center for senior finance executives, daily news, analysis, best practice and case studies in Accounting Regulation, IFRS, US GAAP, Tax, investor relations, corporate governance, Corporate Law, Financial Regulators, Internal Audit, Audit, Corporate Law.
Auditing, Investor Relations, Law and Compliance, Tax

Finance and Banking

CFO innovation Asia, Finance and Banking the Asia Pacific resource center for senior finance executives, daily news, analysis, best practice and case studies in Corporate Finance, trade finance, treasury and risk management, capital expenditure, Banking, mergers and acquisitions
Cash and Liquidity Management, Corporate Finance, Insurance, Treasury Management

Management

CFO innovation Asia the Asia Pacific resource center for senior finance executives, daily news, analysis, best practice and case studies in Finance Management, Corporate Governance, Human Resource Management, Compensation and Benefits, Mergers and Acquisitions, Professional Development, Corporate Real Estate, Risk Management, Budgeting and Forecasting, Business Process Management, Business Process Reengineering, Outsourcing.
Budgeting and Planning, Business Expense Management, Human Capital Management, Outsourcing and Shared Services, Risk Management

Metrics

Corporates, Financial Services

Technology

CFO innovation Asia Technology the Asia Pacific resource center for senior finance executives, daily news, analysis, best practice and case studies in Finance Systems, Business Intelligence, EPR, Accounting software, CRM, Cloud Computing, Telecommunications, Business Process Outsourcing, Business Process Management Software.
Business Intelligence, Enterprise Software and Systems, Financial Systems, Security