Around the World in 60 Minutes

IAB key trends, rankings and
research in 2013
Ana Gyorkos, Editor
For BKR International, Dublin
A brief introduction…
Running order
•Global analysis of network and association
performance in 2012 – sneak peek for 2013
•Key global trends (M&A, service lines etc.)
• Regional trends
• Special analysis: China and Africa
•Where does BKR International stand?
•What does the future holds?
2012 – faltering growth
Facts & Figures
45 surveyed networks/associations
22 Networks
23 Associations
$165.4bn overall market
fee income
Networks have 88%
market share globally
Big Four have 67%
market share
48% of overall fees earned are
from Audit & Accounting services
23% from Tax
29% from advisory
reported a decrease in
annual fee income
reported double digit
M&A – from prediction to reality
As growth stalls in developed markets, M&A presents an opportunity for growth
PKF International hit most in 2012 as BDO International
firms merge with its Australia, UK and part of China
Large single firms in the US merging: LarsonAllen and
Clifton Gunderson, JH Cohen and Reznick Group
Big Four focusing on advisory acquisition
especially in the IT and analytics sector
Not many Big Four firm takeovers in 2012
Large scale M&A expected to increase into 2013
Firm leaders engaged in increasing number of discussions
regarding potential M&A activity
6% to $145bn
Grant Thornton International
overtakes RSM as 6th largest
network, leading by $194.2m
Nexia International claims back
place of 10th largest network by
overtaking PKF International
Top 10 networks fee income
6.5% in fy12; in fy11
up 8%
Associations - growth flat
Total fee income $20.3bn
No change in the top 10 ranking
IGAF Polaris rebrands as
Top 10 associations fee income
0.4% in fy12; in fy11
up 7%
World survey 2013 sneak peek
Deloitte took over PwC as largest global network – advisory services
race heats up as assurance declines
BDO revenues expected to increase significantly (key economies
such as the UK, South Africa, China…)
Decrease in revenues expected for PKF International and potential
decrease for RSM
Several moves between member firms – some associations seeing a
decline year-on year while new ones are being set up
Another year of growth expected and the increase in top 10 market
Audit margins decreasing –
pressure to increase efficiency
Standard compliance – still
no plan on IFRS in US and Japan
Fee pressure continues to rise
Audit: under pressure
Increasing statutory
audit threshold
Decrease in client loyalty
Regulatory oversight
Growth by Country: IAB
Big Four
North America
South America
Africa and Middle East
Revenue vs. Staff
• Strongest mid-tier market – Since 2013
Ruihua the 3rd largest firm in the market
• Big Four under regulatory pressure
• Significant push to develop strong
domestic players, which could become large
international players – by the MoF and
• Shinewing and Reanda International
different way of approaching international
• Concerns over audit quality of domestic
firms as they move towards international
clients. Software and quality control
improvements needed
Emerging opportunities - Africa
• Why Africa?
• In 2013 IAB Africa survey a combined 25 networks (14) and associations (11)
took part – combined fee income of over $2bn
• Mid-tier revenues between $1m (Key Will Group) to $108.8m (Praxity/includes
• Accounting networks and associations have significantly increase their
investment in the continent
• Big Four looking to integrate practices
• For mid-tier associations and networks difficulty to find member firms
• Fears of corruption, quality and talent shortages
• Countries to watch out for
Regulation, regulation, regulation
Regulation all around
•Regulation in the market becoming
extremely fragmented, but business
increasingly global
• European debate awaiting trilog (Council,
Commission and Parliament) – mandatory
rotation an option – directive or regulation
•UK Competition Commission
• US congress stops PCAOB mandatory
rotation debate
• India Companies bill resulting in challenges
and opportunities for the mid-tier
Biggest Issue
What the future holds
• More M&A among firms globally
• Continued fee pressure though some improvements in sight
• Increased expansion across regions of Africa
• Increased public scrutiny of tax work
• Pressure to find niche advisory work
• Increased regulation compliance work
• Capping staff numbers in developed markets
• Being able to work truly internationally
becoming an even bigger challenge due to regulation
Thank you
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