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Friday, 30th September 2022 |
| Accountancy Survey 2011: Fee income stabilises for top 20 accountancy firms |
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| The recovery begins for Ireland’s top accountancy firms as fee incomes level out and stop the falls of the previous two years. The survey also shows the industry has increased employment by 5 per cent and recruitment will grow by 12.5 per cent in the year ahead compared with the year before |
The Irish accountancy industry has reached what maybe the beginning of the end of falling revenues according to the headline figures in this year's Finance Dublin Accountancy Survey. In the past year fee incomes have stabilised and while the combined fee incomes of Ireland's top twenty accountancy firms has fallen, the total falls by just 0.1 per cent. The total fee income of the top twenty firms is €1071.3 million down from €1072.1 million in 2010, a shortfall of €1.8 million. Growth returned for Ireland's ten biggest accountancy firms with fee incomes rising from €1002.5 to €1004.9.
The stabilisation follows falls for two years running in fee income. In 2010, fee income fell by 10.1 per cent and in 2008-9 there was a drop of 5.1 per cent , which was the first recorded fall in the history of the survey. This leaves overall fee income still some 15 per cent below the peak achieved in 2008.
Of the largest accountancy firms both KPMG and Ernst & Young returned to growth this year. Ernst & Young in particular posted a very positive growth of 5 per cent while KPMG's fee income rose from €231 million to €233 million. Grant Thornton are however the stand out in this year's survey posting a dramatic increase of €18 million, an increase of 34 per cent from €53 million to €71 million making it a record year for the firm. This increase in fee income at Grant Thornton was attributed by the firm to mergers and acquisitions activity in its Belfast operation – Grant Thornton have been active in the past year in the M & A space and as the joint administrators of Quinn Insurance were involved in its acquisition by Liberty Mutual.
The areas that have facilitated this recovery in revenues comes from a number of areas identified by the managing partners (MPs) in the survey. Highlighted by a number of the MPs is the contribution of foreign direct investment to the Irish economy and exporting, internationally focused businesses.
Terence O'Rourke, managing partner at KPMG says: 'Across our audit, tax and advisory practices we see evidence of the two speed economy with parts of the Irish economy performing very well and our teams have been busy supporting such clients as they strengthen their product portfolios and develop their presence
internationally.'
O'Rourke also notes pensions, cost management and the ongoing work in the banking sector that 'continues to require lots of support in dealing with their own restructuring agenda, NAMA issues etc.' as fee producing areas for the firm. Ronan Murphy, managing partner of PricewaterhouseCoopers describes a strong flow of work coming from FDI and export sectors and also highlights the work from the asset management sector in which PWC has a strong franchise. Mike McKerr, managing partner at Ernst & Young, says, 'businesses which aren’t solely focused on the domestic market are in a better position at the moment than those who are restricted to the Irish market.' Specific sectors which McKerr notes is the 'significant new work arising from the introduction of the transfer pricing rules' and an increase in demand for our R&D tax services.' In E&Y's assurance team, McKerr says 'shared service centre activity and fraud prevention and detection projects is driving growth.'
Corporate recovery remains a significant contributor of fees in most firms. 'Demand for our insolvency, restructuring and debt resolution services and specialists remains high and as stated last year we see this continuing for some time to come.' says O'Rourke. Brendan Jennings the new managing partner at Deloitte says, 'services such as restructuring and debt advisory, M&A, business transformation and business analytics' are all in demand and all are areas where Deloitte have 'made a concerted effort to invest in – in terms of resources and capabilities.'
Murphy has a positive outlook, 'As certain sectors in the economy begin to show signs of recovery, we are also experiencing strong demand from businesses positioning themselves for growth. Such support includes working with these clients to improve their operational efficiency, develop their business strategy and strengthen their short- and long-term financial position. Finally, we continue to work with a number of clients to help them expand into emerging markets such as South America, South East Asia and the Middle East.' O'Rourke also notes the potential in new markets, 'we are beginning to see projects emerging from the high growth markets of the East and South which over time may convert into a significant revenue stream.'
One of the features of the recession that is noted by most of the managing partners is increased competition and the effects it has on services. Derry Gray the new managing partner at BDO says,'The market is extremely competitive and the pool of potential clients is significantly reduced from four or five years ago. I believe that the sector requires a level of merger and consolidation activity over the coming years to right size the industry.' John Glennon, managing partner of Baker Tilly Ryan Glennon says, 'Competition in compliance areas is strong and becoming potentially destructive with continuing downward pressure on compliance fees, which could lead to a drop in standards. Tendering has become the norm with most assignments being subject to a formal tender process. It is important that in the context of public work that full transparency exists as to the criteria and methodology utilized in awarding contracts.'
Joe Carr, managing partner of Mazars says that, 'The large corporate accountancy market is currently dominated by an oligopoly which creates a lack of competition' and, 'the internationalisation of the Irish accountancy market has become a significant issue whereby firms are using their international centres of excellence and using international colleagues to work on projects – this has created clear leaders in particular sectors or business areas.'
In relation to changes at the European level for the Big Four accountancy firms Jim Mulqueen, managing partner at RSM Farrell Grant Sparks says, 'We welcome European Commissioner Barnier’s suggestions which were recently aired in the media, and believe that any measures which seek to open up this market and provide transparency will be for the greater good of the profession.' |
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