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: 

http://goo.gl/vbMiYn

Audit Firm: PwC Chairman Interview

Petra Justenhoven recently sat down in Frankfurt with Dennis Nally, Chairman of PricewaterhouseCoopers International Limited, to get his views on a range of issues and events related to the past year. 

Petra: Dennis, as people look through the 2015 Global Annual Review, despite some challenges, it seems like it was a very successful year for PwC.

Dennis: Overall, it was a very strong performance for PwC. The environment that we are dealing with today is challenging – whether it’s the global economy, the geopolitical issues, or the stiff competition. PwC performed really well with revenue growth of 10% putting us over the US$35 billion mark for the first time. We’ve got great momentum going into FY16, with much to build on. There’s a lot to be proud of across the PwC network.

Petra: You mention solid growth overall – do specific areas stand out?

Dennis: 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%.

And when I look across the globe there are a lot of positives. I start with the US, the largest firm in our network, revenues up by an impressive 10%; our UK firm, a robust performance, up 9%; South America a strong result in a very challenging region – up 8%.

Growth in the Eurozone is challenging, as you well know, but I look at practices such as Italy up 11%, Germany 8% and France 6%, doing well in a very difficult marketplace

China is going through a lot of adjustments to its economy but our firm, the largest of all professional services firms in China, grew 8%.

And India, the fastest growing firm in the PwC network, up 17%.

And so, as I say, it gives us much to build upon as we head into FY16.

Petra: Coming back to Europe, you know that here the regulators are focused on audit, and even more on tax advice. What kind of impact does that have on PwC?

Dennis: Well, the regulatory environment continues to be very challenging, not just for us but for our clients. One of our biggest challenges is that the regulatory environment is not always aligned in all parts of the world. Also, the movement to mandatory firm rotation here in Europe is going to generate significant change for everyone – not only for the profession, but also for our clients as they implement the new rules.

Having the highest quality audits is the key to success and the foundation of our brand. Whilst we support reforms that will enhance audit quality, we don’t believe that mandatory firm rotation is going to achieve this. But the rules are the rules, and we will work with our clients to deal with these changes, whilst ensuring our quality remains of the highest standard.

As for tax reform, I think everyone agrees that in many cases tax regulations were written many years ago for a different type of global economy.

So we need tax rules that are really fit for purpose. With PwC having the largest tax practice in the world, we feel that it is a part of our responsibility to engage in that debate and to share our points of view and perspectives. And, of course, we’ll do so. But it is a challenge.

Petra: Eighteen months ago, PwC made history with our largest acquisition, Booz & Company, now known as Strategy&. How has that progressed?

Dennis: Without question it’s an incredibly strong move for PwC. The marketplace is continually telling us that the need to move from just providing advice to really dealing with solutions is an absolute must. The capabilities that Strategy& has brought into PwC allow us to do that.

But this is not just about advisory. The whole notion of going from strategy to concrete solutions is applicable to our assurance business and our tax practice. So we are very excited about Strategy&. We are well on our way to making this transaction a real success for PwC across the world.

Petra: In addition to acquisitions, PwC continues to develop joint business ventures and alliances – the most recent being with Google. Can you talk about that?

Dennis: Yes it’s a great point Petra, because I would say whether it’s Google or some of our other alliances with Oracle or Microsoft, we need to think about new ways of doing business.

The idea that as a professional services network we would house all of those capabilities within PwC is a model that’s really outdated.

We are working with Google in a number of areas, like cyber security, to co-create solutions for our clients. We bring in the content, they bring in the technology. So you can expect more of those types of arrangements in the future.

Petra: You just mentioned technology driving client services. What does technology mean for us?

Dennis: The whole issue of technology is clearly one of the most significant megatrends that we’ve seen. It’s transforming everything – whether it’s the digitalisation of business or the use of big data.

We have an important role to play in terms of how we help our clients, and obviously the alliances that we talked about will help facilitate that. But if this is disrupting our clients’ businesses, it’s going to disrupt PwC’s business as well. So we now think about the use of technology in a very different way, to provide better, more efficient services across the whole PwC network. Our aspiration is to become much more of a technology-enabled organisation.

Petra: You’ve talked about the focus on technology, but we are a people business.

Let’s step into the shoes of our future colleagues. So what would you say to persuade potential employees to join PwC?

Dennis: The world is such a dynamic place today – there are so many tremendous opportunities out there to help clients – it’s an exciting time to be part of a professional services network, and particularly PwC – so come join us!

I think PwC is unique because of our special focus on talent – not only attracting the best and brightest but how we help develop their careers, and give them the right kinds of experiences.

I like to say we help them build their résumé, we help them build their balance sheets. What we want to do is help individuals set goals that meet their needs, their timetable and their aspirations.

We want them to be part of a culture that allows everyone to succeed.

Petra: Has anything changed in terms of the kinds of people or skills we are looking for?

Dennis: Well, obviously the world is changing pretty rapidly, and so our talent needs to keep up with that. I talk about the necessity of every one of our people continually reinventing themselves and having a focus on progressing their own careers. We have talked a lot about technology, and having the ability to continually adapt to new technologies will be, I think, a real skill for the future.

But the world is so complex today, we need people who know how to work with teams, people who know how to collaborate, and who know how to listen. The whole issue of diversity and being able to work with different people with different backgrounds and cultures is a critical skill set. We help our people develop these skills and capabilities – that’s why I think it’s so exciting to be a part of PwC today.

Petra: You’ve mentioned diversity and I know PwC is involved in many programmes promoting diversity. Just this year we saw PwC joining a UN initiative called HeForShe. Could you talk about what we are doing in this area?

Dennis: I’m absolutely convinced that when we bring people together from different backgrounds – whether it’s gender or diverse types of capabilities – there is no question that the quality of our thought process is significantly enhanced. And so creating an environment where all of our people feel that they can make a contribution and that we value that contribution is critical for us.

We think HeForShe is a unique way to approach the diversity agenda – getting men across the PwC network to think about the issue of gender diversity in a different way. Sometimes I get a little frustrated that we are not making as much progress as we want to on the gender diversity issue, but PwC has a real focus on it – starting from the very top.

Petra: Many organisations are deliberating over their purpose. How would you define the Purpose of PwC?

Dennis: Given the world that we are operating in today, I believe every institution needs to have a clearly defined and articulated purpose.

For PwC, it’s about building trust in society and solving important problems. It starts with a fundamental premise that as an organisation that is over 160 years old and that’s providing substantial comfort to the capital markets, we believe we have an important role to help build trust in our society.

Secondly, there are some pretty challenging and difficult issues out there and resolving those problems is a real focal point for PwC.

A good example is our work in Norway to help develop a new clinical pathway for patients with acute stroke.

I see Purpose as our guiding light, who we are and what we are trying to get accomplished.

Petra: What do you think PwC will look like in 10 years, in 2025?

Dennis: Well, 2025 may be a little bit of a stretch – the world is moving so quickly. But we all know this global economy is so interconnected today, and to me that presents a lot of exciting opportunities. So at PwC we need to continue to evolve to deal with those issues and challenges.

That includes becoming much more of a technology-enabled organisation, and continuing to anticipate the solutions our clients will need in this ever-evolving business environment.

That translates into a lot of opportunities for all of our people, and to me that’s really the exciting part of the journey to 2025.

Petra: One last question before we close.

You will step down as the Global Chairman next year. Is there any final thought you would like to share?

Dennis: Well, first off I have a lot to do here over the next eight months or so, and I’m very much focused on what we are trying to achieve within the PwC network. But as I mentioned at the outset, we have a fabulous foundation to build upon, and I’m really excited about the momentum that we have in terms of what we are doing for clients and other stakeholders, and where we are trying to take the PwC network.

And I would sum up by saying it’s just a tremendous time to be in professional services and, more importantly, to be a part of PwC – it’s a chance to make a contribution that is value added and to really make a difference as you shape your career.

Petra: That’s a great message. Dennis, many thanks for your time and for sharing these insights with us.

Dennis: Thanks, great to be with you Petra.

Reference:

Text:  http://www.pwc.com/gx/en/about/global-annual-review-2015/chairmans-interview.html

Image: http://www.pwc.com/gx/en/about/leadership/dennis-nally.html

Audit Firm: Interview with KPMG Partner

Audit-is-cool presents an excerpt from the Interview of Simon Collins (Chairman & Senior Partner KPMG UK).

Lane Mean: Hi, I am Lane Mean, I am content director of local world newspapers and I am introducing this evening Simon Collins. Simon is the chairman of the KPMG group, one of the big four. The debate tonight is actually being sponsored by the Bristol Post.

Simon you are seen as something of an inspirational leader in accountancy terms in the big four. How have you achieved this do you think? Because you were actually voted in as chairman by your peers, were not you?

Simon: Yes we had a pretty full blooded election, so it‘s a real democracy. 600 partners chose who they wanted to lead the firm for the next five years.

Lane Mean: So why do you think you won that?

Simon: I think you would have to ask the 600 truthfully but I think you the sort of messages I think were important to the partners were about a clear sense of purpose and direction about where the business goes, where it fits in society and a very big theme for me was how we put trust and respect back into business and the accountancy profession and KPMG.

Lane mean: And how do we because, I mean I am not bracketing you in the same way as bankers, but a lot of mistrust in the financial area is not there?

Simon: I think there is a huge amount of mistrust, I think broken is the only way to put it between business generally and society and I think there is a number of reasons    for that .We have got in almost every industry there is an example of behaviors that you cannot hold up and say that‘s what good business is. So whether it’s pharmaceuticals and rivalry, whether it’s horse meat, whether it’s liable miss–selling, whether its tax, every industry has got something that damages trust. So I think we have got a long slow journey to claw that back through good behavior and actually concentrating on doing the right.

Lane Mean: But how can you hope to do that because you have got loads and loads of partners have not you?

Simon: I don’t think that in a sense is the difficult bit, I mean certainly for us as a firm we have integrity and responsibility really close to our hearts and frankly the partnership model is really good. I don’t think I have got a single partner who does not care passionately about leaving the business in better shape than they find it and so doing the right thing, I think comes naturally.

Lane Mean: Yeah I mean the right thing, so what is right thing for a member of the “big four” like KPMG?

Simon: The right thing is to advise clients responsibly, to behave with integrity, to be a true commercial animal. I make no apology for profit being a big part of what we are trying to achieve to be sustainable business you have to make profit you have to be successful, but to be sustainable and to pass on a better business you also have to have at least a benign footprint in society, better still if business can actually contribute to society and leave good behind.

Lane Mean: Is it ethical to advise people to dodge tax do you think?

Simon: No if you ask question like that, no. Is it ethical to take advantage of legislation that   specifically encourages companies to locate in the UK and to take advantage of tax breaks yes. So I think where we get into trouble in part of that trust equation is when there is a lack of clarity about what we‘re talking about. Genuinely agree just bad behavior in tax planning is immoral, just outright wrong  and we condemn  it, the big accounting firms will have nothing to do  with it , utilizing tax breaks that are specifically put in place by government to compete  internationally, to encourage investment and people to come here and do business is a really good thing  to do. Good things to do for society at large and we get mixed up with that.

Lane Mean: But when we see companies going before select parliamentary committees as we have done and being frankly terribly embarrassed, I am not saying that you are involved with any of those people ,but it’s not good is it when the public sees that?

Simon: No it’s really bad for trust  but I think what we  have got to look at is several  things , you have got to look  at whether companies have been lawful and then whether politicians and society like the outcome of them being lawful, so if you look at some of big companies in the news for paying low headline rates of corporation tax ,that looks on the face of it  something that doesn’t work  for  society, but they have got  there without a breach of law at all, and in fact  in many cases they have  got there  specifically taking advantage of  things the government,  successive governments  have intended them to do. If society and government does not  like the result of that , which is that company X only pay 5p in the pound corporation tax, for me and for the profession. I think that’s a problem for legislators and not a problem to parcel out to tax advisers.

Lane Mean: No, now the day after the election, the budget rather, not the election, we are talking, I mean if you were in number 11.What would you do in terms of your first budget if it was yesterday? Have you got some thoughts on that?

Simon: I think that I wake up many days grateful. I am not in number 11 or politics generally, and I think one of big problem on number 11 anytime. NOW or recently is being not a great deal of money or flexibility to do things. it seems to me what the chancellor was looking to do, was to encourage growth in the economy to make the cake bigger and actually to get Britain exporting again, manufacturing again, and to the extent the limited money available was directed in those directions, actually I think it was a pretty decent budget for business.

Lane Mean: what about the grey vote, now lots there wasn’t there? Lots to encourage people retired people, to vote for the coalition in a year’s time?

Simon: I don’t know about voting, I think there was a lot for savers and there probability is, I think you’re right ,there’s probably a correlation between savers and the grey pound and so on .I think there was a lot there to actually encourage saving and actually investment indirectly as well and I think again you know that goes around in a virtuous circle for me with encouraging investment in industry and growth in manufacturing and so on ,so I don’t know ,I am sure, you’d have to ask the chancellor what his political ambitions were around those things, but from an economics point of view I think they made perfect sense.

Lane Mean: So what are you advising your clients from today on about how they see the next couple of years? Because you know we are going into election in a year’s time you will have a view about that?

Simon: Well it’s not so much political thought what we have got .we have got 24 offices up and down the country ,we look after companies from relatively small companies right through to the multinationals what we are seeing is a definite uptick in sentiment .definitely a more positive feel from our clients up and down the country .manufacturing, export, every, one feeling a little bit brighter .The growth figures support that ,job creation support s that ,so I think for the first time in quite a few years we have got what I would describe as a “benign back cloth “for business to plan .now we have also got some uncertainties we have still got very topical things around the Ukraine and political uncertainty, geo-political uncertainty if you like, Scottish independence is worrying people it’s not much that business should have or does have an outright view of right or wrong it’s simply uncertainty .So we have got, now we are in march, we have got general election next may. Business does not like uncertainty. On the other hand it’s learnt to cope with it, and I think overall watch for uncertainty, but invest into that “benign back cloth”.

Lane Mean: And what about you? You have got a five year plan.   I guess in your head? You are an accountant, accountant plan, so what’s the five years plan?

Simon: The five year plan, if you start at what I think of as sort of 70,000 feet, the five year plan is to leave behind a better business after my period of leadership than I inherited, and I think all leaders should have that in mind. I want to leave the business prouder, financially stronger and with a better footprint in the communities what you referred to earlier, than I found it.

Source

Complete Interview can be watched at the following link.

https://www.youtube.com/watch?v=Jg6_RlcZBV4

http://www.kpmg.com/uk/en/about/aboutkpmg/kpmgfoundation/pages/simon-collins.aspx