Showing posts with label business performance. Show all posts
Showing posts with label business performance. Show all posts

Wednesday, July 27, 2016

Audit Firm: EY Ireland Managing Partner

Mike McKerr has been Managing Partner of EY Ireland since 2009, responsible for the Republic of Ireland and Northern Ireland.  During his career with the firm, he worked in the US and UK, and was a partner in EY’s M&A division.

EY REPORTED STRONG GROWTH IN THE YEAR TO JUNE 2015. TO WHAT FACTORS DO YOU ATTRIBUTE THIS OUT-PERFORMANCE?

Posting more than 33% growth in the last two years is a significant achievement, and we are very pleased that it’s all been organic growth. The momentum in our business today is down to our long-term investment strategy and the decisions we took during the downturn. For example, we did not make any redundancies but increased market activity and upskilled our people to work across new areas. This strategy has certainly paid off, and over the last two years we have admitted 14 new partners and have recruited top talent across experienced and graduate hires.

We continue to see robust growth in our core audit services in addition to strong demand for broader assurance services, including Data Analytics and Fraud Investigation and Dispute Services (FIDS), which grew more than 40% in FY15.  Based on the latest transparency reports, EY is now the second largest audit and assurance business in Ireland.

Change continues to be a key focus for our domestic and international clients, driven by both the need to control costs and remain competitive, but also to ignite growth and penetrate new markets.  We invested heavily in new areas including Data Analytics, Assurance, Centres of Excellence and Performance Improvement.

The PI team in Advisory led by Frank O’Dea, continues to grow due to an increase in demand for business transformation, process improvement and IT change management services. The PI team alone now employ over 200 people working across public and private sector clients, improving key business functions to achieve significant and sustainable improvement in enterprise-level performance.

But our success is about much more than financial results. It is also about our people, who continue to deliver exceptional client service. EY has a leading people culture and a transformational approach to developing talent. The firm continues to accelerate investment across the organisation and intend to acquire additional new office space in a number of Irish locations over the coming months to cater for their growing numbers.

By focusing on our people agenda, we have been able to create real momentum both inside and outside the organisation. It’s a virtuous circle – we enable them to deliver exceptional service, which strengthens our client relationships, helps us to capture market share, and this growth creates career opportunities for our people.

EY IS DOING PARTICULARLY WELL WITH AUDIT WINS. WHAT’S THE REASON FOR THAT? WHAT’S YOUR VIEW ON PROPOSALS FOR STATUTORY ROTATION OF AUDITORS?

EY had several fantastic audit wins in FY15, which reflects the significant investment made globally and locally to innovate our audit service through the use of analytical tools. Collectively our Audit and other Assurance services grew 16% in FY15, driven by excellent performance across our core Audit business, Fraud Investigation and Dispute Services and Data Analytics.  We will continue to invest in these areas.
Regulatory change, particularly audit rotation, will continue to alter the audit market for some years to come and we believe innovation and data analytics solutions will be in increasing demand.

European legislation on audit reform enacted in April 2014 will come into force in Ireland from June 2016 in the form of a new EU regulation and amendments to the existing EU Audit Directive on statutory audit. The objective of the reform measures is to ensure the objectivity and independence of auditors and includes the requirements for the mandatory rotation of audit firms on public interest entities.

These significant audit reforms will affect the auditing profession, the entities we audit and our relationships with our clients and the regulatory authorities who supervise us. We have actively engaged on these changes with the legislators and regulatory authorities, including making submissions to reflect the views of EY Ireland.

We are committed to supporting regulatory change which is appropriately proportionate for financial statement preparers and their auditors, and which ultimately strengthens public confidence in the audit model. EY Ireland will therefore continue to support regulatory change that enhances stakeholder confidence.

EY IS A BIG 4 FIRM THAT MULTINATIONALS GO TO. HOW CAN IRISH SMES BENEFIT FROM USING YOUR SERVICES TOO, AND CAN THEY AFFORD IT?

Critical to our market leading growth in Ireland is combining our global strength together with deep local connections in each of our offices across Ireland.  Our ability to collaborate internationally helps both multinational and entrepreneurial clients expand across borders.
While FDI can be a critical enabler of growth, it is equally important to help Irish companies become global players in their own right. The EY Entrepreneur Of The Year programme is the leading business award in Ireland and represents a unique business development and support network opportunity for entrepreneurs across the island of Ireland.

Our annual EOY CEO retreat is designed to take entrepreneurs out of their comfort zone and challenge them to think differently about their business.  Attendees are given the opportunity to expand their leadership skills, forge links to new markets and develop their own successful strategy for growth in addition to developing an invaluable network of peers.
Change continues to be a key focus for EY clients of all sizes, driven by both a need to control costs and remain competitive, and to ignite growth and penetrate new markets.

The diversity of our service offering and international reach means that we have a broad spectrum of experience to offer indigenous and multinationals alike. In this way, we can transfer our expertise of working with large multinationals to Irish SMEs, focusing on improving key business functions to achieve significant and sustainable improvement in enterprise-level performance.

STABLE GOVERNMENT SINCE 2011 IS ONE FACTOR CREDITED FOR RENEWED BUSINESS CONFIDENCE. IS THIS ISSUE OVER-STATED, OR IS STABLE GOVERNMENT REALLY THAT IMPORTANT FOR ECONOMIC GROWTH GOING FORWARD?

A number of factors have contributed to the economic growth that Ireland has enjoyed in recent years – among them is confidence and having a stable government in place. Having a stable economic environment has helped to reassure both Irish firms and external investors that it is safe to invest, takes risks and pursue new opportunities. During 2016, we expect to see a strengthening domestic economy, and continued export growth further enhance business confidence.

Late last year, we carried out a survey with our EOY community.  The survey shows that over half of the entrepreneurs surveyed have conducted business with other members of the EOY community, demonstrating the importance of professional networks in creating a supportive climate for doing business in Ireland. Furthermore, a skilled and educated workforce, low corporation tax rates and government support were listed as the biggest enablers to doing business in Ireland.

It therefore vital for government, industry and academia to understand the specific challenges facing entrepreneurs and to collaborate to solve problems, address legislative and cultural barriers to success, and together shape the future of entrepreneurship in 
Ireland.


Reference: 

Tuesday, November 24, 2015

Audit Firm: Big4 Financial Performance 2015

The Big Four firms have recently announced their results for the fiscal year 2015. PwC has retaken number one spot from Deloitte as the world’s largest firm by revenue. KPMG is yet to announce its results.
A brief overview of the performance of these firms in comparison with the previous year is as follows.

PwC has recorded a global annual revenue increase of 10% to $35.4bn (£23.34bn), which represents its strongest growth in 10 years. Consulting now accounts for more than 30% of PwC’s total revenues after growing 18% to $11.2bn during the 2015 fiscal year. This was boosted by the acquisition of Strategy& (formerly Booz & Company) in April 2014. Revenues in PwC’s auditing division grew more slowly, rising 6.2 per cent to $15.2bn in a year marred by the profit misstatement scandal at Tesco, a PwC audit client.

According to Dennis Nally, Chairman of PricewaterhouseCoopers International Limited,
“As we look at the results for the last 12 months, all of our lines of service showed really positive growth – led by Advisory which is up 18%, Tax up 7% and our Assurance business notwithstanding some really difficult competitive market pressures – up 6%.”

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their related entities. Deloitte provides audit, consulting, financial advisory, risk management, tax and related services to public and private clients spanning multiple industries.

Deloitte member firms (Deloitte) reported aggregate revenues of US$35.2 billion for the fiscal year ended 31 May 2015 (FY15), representing 7.6 percent growth in local currency terms.

EY announced combined global revenues of US$28.7b for its financial year ended 30 June 2015. This represents an 11.6% increase over financial year (FY) 2014 revenues in local currency, outpacing FY14 growth (which had increased by 6.8% over FY13).
All of EY’s service lines continued to grow in FY15 ahead of their FY14 growth: Advisory grew 17.6% (vs. 14.4% growth in FY14); Assurance 8.1% (vs. 4.5% in FY14); Transaction Advisory Services (TAS) 15.5% (vs. 6.5% in FY14); and Tax 10.3% (vs. 4.3% in FY14).
In FY15, EY headcount reached 212,000 globally – an all-time high.

A graphical representation of the performance of these three firms is shown for comparison purpose.

Head Count Graph


 Revenue Graph


KPMG is due to report its 2015 results in December. KPMG International Cooperative ("KPMG International") is a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. We are presenting here KPMG’s 2014 and 2013 performance comparison.

The KPMG network delivered strong growth and recorded-high revenues of USD24.8 billion for the 2014 fiscal year, an increase of 6.3 percent in local currency terms over the prior year (2013), recording growth across Audit, Tax and Advisory.

Head Count Graph




Revenue Graph

References:

Thursday, October 22, 2015

Audit Firm: Vault Top 50 US Accounting Firms

Vault.com, an online careers site, has unveiled its annual ranking of the best accounting firms to work for in the U.S. Vault uses the following survey methodology to rank the audit firms.
Methodology: “When Vault asks accounting professionals what matters most to them in choosing an employer, they continually tell us that although prestige is important, it's not the only determining factor. In addition to prestige, accounting professionals find the following factors extremely important: firm culture, type of work, location, work/life balance, compensation, business outlook, and training opportunities.
As a result of these findings, Vault has compiled a weighted formula that reflects the issues job seekers care about most. We believe that this formula showcases those accounting firms deemed the Best to Work For. The Vault Accounting 50 is based on the following:
  • 40 percent prestige
  • 20 percent firm culture
  • 10 percent work/life balance
  • 10 percent compensation
  • 10 percent overall job satisfaction
  • 5 percent business outlook
  • 5 percent formal training

The top 10 Accounting/Auditing Firms in US at the Vault top 50 for 2016 are as follows.
  1. PwC (PricewaterhouseCoopers) LLP
  2. Ernst & Young LLP (EY)
  3. Deloitte LLP
  4. KPMG LLP
  5. Grant Thornton LLP
  6. BDO USA LLP
  7. McGladrey LLP
  8. Plante Moran
  9. Moss Adams LLP
  10. Crowe Horwath LLP

You can see the complete list of Top 50 Accounting firms by Vault at the under mentioned address:

Additional Thoughts

Accounting Firms should develop a congenial and friendly working environment for its employees and young graduate trainees so that they are developed and groomed professionally. A culture that promotes leadership, diversity, ideas generation will not only nurture the employees to grow professionally but will also bring good reputation for the firms locally and globally.

Wednesday, February 1, 2012

Audit Firms: Financial Performance 2011


What do we know about financial performance of accounting firms, especially the Big Four firms? I planned to do some analytics in this area and provide my readers with results this week. However, the smart guys from Big4 site have already done this work and all I want to do is to provide some additional considerations.
Thus, this blog post is going to discuss revenues of accounting firms.

Big4: Business as usual
The Table 1 represents revenues of the Big4 accounting firms and growth rates.
Table 1: Big4 Revenues and Growth Rates 

Figure 1: Combined Big4 Revenues

I would consider following points:
First, generally the Big4 firms have overcome consequences of financial crisis, i.e. revenue of 2011($103.6 bln.) exceeded the pre-crises level of 2008 ($101.3 bln.). However, E&Y did not manage to achieve pre-crisis revenues.
Second, PwC showed good performance in 2011 with 10% growth and regained dominant position in Big4 after it was given in to Deloitte in 2010.
Third, Deloitte is distinguished by the highest compound annual growth rate (CAGR) for the period of 2007-2011. Meanwhile, E&Y has reported the lowest CAGR of all Big4 firms.

Big4 Audit Services
The blog is about audit, so we can’t avoid talking about audit fees percentages in total revenue, which are reported in Table 2.  J

Table 2: Big4: Audit Fees Share in Total Revenue

Figure 2: Combined Big4 Audit Fees Share in Total Revenues

The sharp decrease of E&Y’s audit fees share in 2008 should not mislead us. The issue is that E&Y reported the combined figures of assurance and advisory services before 2008. That is why, for illustration purposes I depicted tendencies in audit/assurance revenues starting from 2008 year.
The tendency of decline in audit & assurance services might indicate two issues. First, the accounting firms are eager to provide consulting/advisory services, especially in economic crisis time, when clients need some advice on how to improve their businesses. Second, clients might be dissatisfied by the level of assurance services provided: accounting firms can not provide in this area something special because of strict unification of reports, or e.g. some clients wanted to delist themselves from stock exchanges. Anyway, this is a very deep and serious issue, which deserves to be discussed separately.     

Non-Big4 Accounting firms
I decided to compare information about Big4 firms with 2 big accounting global networks, BDO and Grant Thornton International (GTI). I picked up these 2 firms because they publish their reports online and information was rather accessible. According to Accountancy Age global ranking BDO and GTI, occupied 5th and 7th places respectively in 2010.

Table 3: BDO and GTI Revenues and Growth Rates

Figure 3: Combined BDO and GTI Revenues

Remarkably, the combined revenues of BDO and GTI are 2.4 times less than their closest Big4 rival, KPMG! BDO has shown good CAGR for 2007-2011, and what could be also mentioned is that the decline in revenues of -2% in 2009 was the lowest comparing with Big4 and GTI. Regretfully, GTI was not able to achieve pre-crises revenues ($4 bln.)

Non-Big4 Audit Services Share
I made the same exercise here as in case with Big4 to provide information about audit revenues, see Table 4 and Figure 4.

Table 4: BDO and GTI: Audit Fees Share in Total Revenue

Figure 4: Combined BDO and GTI Audit Fees Share in Total Revenues

Quite interesting is that the tendency for audit and assurance services growth in BDO and GTI differs from the one shown by Big4 firms. Both firms increased share of audit fees in structure of their revenues in 2009 (from 50% to 53%), and were able to keep these fees on the same level.
Unfortunately, the picture here could be distorted by BDO reporting. The firm reports audit and accounting under the same line. Though report does not specify what sorts of “accounting” services are provided, it might be suggested that these are the services related with help to clients in financial statements compilation, i.e. having non-assurance nature.

Comments are welcomed!
If you have anything to add about performance of Big4 or the other global accounting firms, please feel yourself comfortable to leave a comment. Maybe you have some insightful information about accounting firms’ balance sheets or cash flows J
PS Please, do not forget to vote for your top 3 favorite subjects. The polls are going on the right-hand side of the blog. The rules and explanations regarding subject are here.

Sources: 
1. Reports and press-releases placed on the web-sites of the mentioned firms.