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Accountancy Market Report 2010
Key Note Publications Ltd, Sep 2010, Pages: 172
This Market Report is published at a time when accountants, as well as the rest of the business world, are facing the consequences of a recession. Contrary to what many people might assume, accountants are not benefiting from the recession. Accountancy services comprise four types: audit and accounting (sometimes called business assurance by the major accountancy firms); tax and legal services; corporate finance including business recovery; and management consultancy.
The market contracted in 2009 and it is by no means clear whether it has contracted further during the first half of 2010; at best, it will have stablilised. Audit and accounting, tax and legal services and corporate recovery and business recovery saw a very modest rise in revenues in 2009, but management consultancy (including outsourcing) experienced a fall in revenues. The scaling back of consultancy projects by large business and by government and local authorities has had quite an impact on the consultancy sector. Most of the top 100 largest firms recorded reduced revenues in 2009; this was just as likely to be true for the large firms as it was for the smaller firms.
The accountancy market is dominated by the Big Four global accountancy firms, as it has been since 2002. They audit almost all of the top 100 public companies, as well as the majority of the top 350 companies. Beyond the Big Four there are many so-called mid-tier firms. Some of these are very sizeable and can, at times, provide competition to the Big Four. Broadly speaking, the composition of the top 50 firms — and especially the top 20 — has remained the same in 2009 as it was in 2008. There are some exceptions, with the major one being RSM Tenon PLC, which has made yet more acquisitions and is now in seventh place in the league table of UK accountancy firms.
The work of accountancy firms continues to be increasingly scrutinised. The big question about what an audit should do and how it might be improved has become more important than ever. The Financial Reporting Council (FRC) and the Financial Services Authority (FSA) are both reviewing the practice of auditing. One of the issues is whether the remit of an audit should be widened, while another is whether an audit report should reveal more information than it is currently required to do. Other issues for the profession include changes to the rules concerning the Insolvency Act of 1986, as well as possible alterations to the rules regarding company administrations.
The requirement for accountants to submit corporate tax returns only electronically after 1st April 2011 is set to be a significant change for the profession. New computing systems and structures are also being talked about in the industry, especially what is known as `cloud computing'. Cloud computing could be very useful for accountancy firms, but its installation and implementation need to be thought through thoroughly.
The authors are forecasting a very modest rise in the accountancy market in 2010, followed by slight growth in 2011. From 2012 onwards, growth should be a little stronger.
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