||Friday, 18th September 2020
|Managing partners look to positives as storm clouds gather
|The ability to adapt to the changed economic climate by offering clients new or revised services will be key for accountants going forward, say managing partners in Ireland's top 20 accountancy firms, and the 2008 Accountancy Survey results indicating a decrease in corporate finance, tax and consulting and increase in audit/accounting and corporate recovery comes as no surprise to them.
'The type of services we're offering is different from what we provided 12-24 months ago,' says Ronan Murphy, senior partner at PricewaterhouseCoopers (PwC). 'Performance improvement, cost control and tax advisory are some of the services that clients are using, so there's an increased focus on these and less on transaction-based services.'
Terence O'Rourke, managing partner at KPMG, said that the Survey results on services accurately reflects the change in the market: 'The change in services is one of the things that happens in a climate like the one that we're in now. The availability of less finance and therefore less acquisitions has a knock-on effect in terms of the services provided. Similarly, as companies adapt to the changing environment they need more advice and restructuring-based services.'
'Corporate finance is very much driven by transactions, so when they go down so does this area of the business,' according to Pat Cullen, managing partner at Deloitte. 'And the increase in corporate recovery and restructuring is inevitable with clients who are dealing with financial difficulties.'
'We foresee opportunities in providing innovative corporate recovery solutions to debt providers and equity investors coming much more in demand,' said Peter O'Carroll at BDO Simpson Xavier.
|Peter Carroll |
Grant Thornton's Paul Raleigh agrees, noting that, 'all businesses will be affected by the economic downturn. However, our strong client base and position in some counter-cyclical areas like insolvency will ensure that our firm will continue to perform strongly.'
'The increasing complexity of business gives rise to opportunity,' said Patrick Lawlor at Brenson Lawlor, whilst John Glennon at Baker Tilly Ryan Glennon added that they will be working with clients, 'to help them manage in the downturn with business process improvement.'
Carl Dillon at HLB Nathans echoed the views of the industry in one sentence by claiming that the company
'is well positioned to give advice in tougher markets.'
|Paul Smith |
Some respondents to the 2008 Accountancy Survey claimed that the increasing dominance of the Big 4 firms ensured that the playing field would never be anywhere near level going forward.
|Ronan Murphy |
Peter O'Carroll at BDO Simpson Xavier said, 'clients are seeking alternatives to the established Big 4 - and Big 4 audit concentration is now recognised by regulators as a situation which is unhealthy and we see trends where the market will open up.'
Joe Carr at Mazars added that 'there is a dominance of too few very large players in the market.'
Ronan Murphy at PwC acknowledged that by virtue of their size and structure the Big 4 are in a position to provide seamless services in terms of their global networks and methodology, 'however, other internationals firms have networks of offices and can compete on a reasonably level playing field - we see alot of competition from mid-sized accountancy firms in Ireland and globally.'
Terence O'Rourke at KPMG said that: 'competition is a good thing - and particularly in this market where smaller companies are well positioned to develop niches to respond to clients' needs.'
Regulation and compliance - double-edged swords
Regulation was mooted by some respondents in the Survey as a 'necessary evil' in the industry which can sometimes be an arduous and complex area. Terence O'Rourke claimed that 'regulation is one of the facts of life which we've just got to deal with. Regulation is sometimes very complex, but in some ways I think this is a good thing because it makes people think smarter to deal with issues in a certain way which is good for the company and industry as a whole.'
Pat Cullen at Deloitte agreed, adding that 'regulation provides us with business as clients need advice on regulation, how will impact them and their market, so that is one of the advantages to the accountancy market.'
Commenting on the issue of compliance, Dominic Tighe at KSI Faulkner Orr said, 'our business is heavily compliance based so will not be affected by external factors in the short term. However, in the long term recession could have an impact on the volume of this type of business.'
The impact on Ireland Inc
When asked about the impact of external factors on Ireland's success as a financial centre, managing partners were unanimous in the opinion that Ireland would ride the storm: 'Ireland continues to be an attractive place to invest - it's moving up the food chain and the type of FDI it is attracting is more value-enhancing than ten years ago,' said PriceWaterhouseCooper's Ronan Murphy. 'I don't think that the external credit crunch has had a huge impact on Irish financial services because of the type of business that's based here, for example investment management and asset management are quite removed from its effect.'
'I think there is a solid business model in place in Ireland as a financial centre,' said Pat Cullen. 'It's grown to be a significant marketplace, so it is in a good position to deal with any issues that may arise. I think it will continue to grow, albeit it a slower pace, but it will be more than capable of coping with the changes.'
Terence O'Rourke at KPMG agreed with his contemporaries, claiming that 'the last 20 years has seen Ireland embedded as a financial centre so many companies will continue to invest.' However, he also cautioned that, 'there is a question mark as to whether companies will still be attracted in the same way, with the cost base going up therefore making Ireland less competitive, which is something that as a country we need to be aware of going forward.'