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BP SURVEY ACCOUNTANTS Top Firms Back On A Growth Curve Ireland’s largest accountancy firms returned to modest growth in 2011/12, recording the first rise in fee income since 2008. CHRIS SPARKS finds out from the managing partners where the improvement has come from Ireland’s Top 20 accountancy firms recorded fee income of around €1.1bn in the 12 months to June 2012, according to a recent report on the sector by Finance Dublin magazine. Of that total, €820m was accounted for by the Big Four – PwC, KPMG, Deloitte and Ernst & Young. These accounting goliaths racked up fee income of €970m in 2008, so like the rest of the economy they’ve been feeling the pain in recent years. With a few exceptions, smaller, mid-market accountancy practices have also endured major fee slippage since the recession started, but now most of the top firms report that the worst is behind them. Ernst & Young, with annual fee income of €130m, says that it posted a 12% increase in revenue for its Irish practice over the past 24 months (5.7% for FY12). The firm has enjoyed significant client wins and an increase in revenues achieved by all its service lines, particularly Transaction Advisory Services (up 29% in financial 2012) and Advisory (up 14%). Managing partner Mike McKerr anticipates a tough operating environment for the foreseeable future, but the firm is in recruitment mode as it seeks to expand market share. “Ernst & Young has significantly added to its talent pool with the arrival of new partners: Graham Reid to our TAS team, Frank O’Dea to our Performance Improvement Advisory division and Herman Sidiu to the Assurance division. They bring unique expertise and specific sector experience that will allow us to provide clients with the insight and advice they need to grow the business,” says McKerr. “In our transaction advisory practice there has been an increase in demand for our services from debt-burdened companies seeking positive solutions to help Brendan Jennings, Deloitte restructure their balance sheets. In addition, Ireland continues to produce vibrant companies that require high-quality corporate finance advice as they seek to assess new opportunities for growth. This is especially the case in the technology, services and food sectors, which continue to be a strong backbone for the Irish economy.” The firm also has buoyant demand for R&D and transfer pricing services and in the assurance practice strong growth has been achieved with export-focused domestic clients and shared service centre activity. Fraud prevention and detection services have also been in demand. Another income stream has been working with clients on corporate reorganisations and the implementation of new rules around the future of UK and Irish GAAP. At Deloitte, managing partner Brendan Jennings says good growth was achieved in 2012. “The firm has been extremely focused on capitalising on market opportunities and making the necessary investment in terms of talent and facilities to ensure that we are best placed to realise our potential in what remains an intensely competitive environment,” says Jennings. Strong service areas for Deloitte during the past year have included debt restructuring and advisory, finance transformation, strategy and operations, technology integration, regulatory and compliance services, and transaction support. “We are seeing strong interest in information technology services, including web, mobile and digital,” adds Jennings. “There is also an increasing demand for analytics services, such as helping clients increase sales by analysing customer retention and product pricing. Clients are implementing strategic changes to their operating models, including shared services and outsourcing.” According to Jennings, the management of risk is a critical issue for clients. BUSINESS PLUS MARCH 2013 56
BP SURVEY ACCOUNTANTS Those risks range from cyber security to social media to legislative compliance through to inefficient strategy setting and the efficient use of capital. Separately, the firm sees SMEs looking at key issues of performance, financing and personal tax planning as important. “We have aligned our Deloitte Private offering with the bespoke needs of SMEs to ensure they receive a holistic service,” he explains. Derry Gray, managing partner of BDO, says that 2012 saw further refinement in the service needs of clients of advisory firms. “More and more, the clients looked for specialism and specific expertise, both in service area and in sector knowledge. At BDO we found considerable traction in our new service area of Risk & Advisory, as more and more emphasis is placed upon corporate governance and best practice in Irish business.” Grey adds that in specific key growth areas there will be an improvement in trading conditions and a subsequent increase in business in 2013. “We have pinpointed the financial services sector as one such area, where we believe there will be a particular emphasis on Ireland delivering excellence in fund auditing.” TOTAL STAFF PricewaterhouseCoopers 2,674 KPMG 1,848 Deloitte 1,248 Ernst & Young 1,053 BDO 432 Grant Thornton 417 Mazars 218 RSM Farrell Grant Sparks 188 Moore Stephens Nathans 119 Russell Brennan Keane 117 Baker Tilly Ryan Glennon 85 Source: Finance Dublin Accountancy Survey 2012 According to managing partner Paul McCann, Grant Thornton enjoyed solid trading in 2012. “Everyone in the firm worked really hard to ensure a good result was attained. I am hopeful of more business activity in 2013, in particular more transactions,” says McCann. The services offerings currently showing growth for Grant Thornton are tax, FAAS and business consulting. “I think it’s important that all professional services firms ask themselves, ‘Are we adding value to our clients’ The challenge for Grant Thornton is to ensure that we are. A lot of SME owner-managers are reluctant to talk about succession and the moving of the business onto the next generation, and in my opinion this is where accountants can add a lot of value.” Mark Kennedy, senior partner at Mazars, says that performance last year was bolstered by an increase in the number of organisations seeking advice on how to restructure their business to ensure their survival. “We also had strong demand for our financial outsourcing services,” adds Kennedy. “These services are used by our clients as a mechanism to drive down costs.” The current environment has meant that Mazars’ services in the insolvency and business restructuring areas have grown “significantly”, according to Kennedy, with more staff being added to the unit in recent months. He adds: “SME ownermanagers are facing new challenges that they have never dealt with before. We provide our employees with continuous training on how to help SME owners to identify and address key challenges in the current environment.” continued on page 58 Farrell Grant Sparks Audit • Tax • Advisory Connected for Success For all audit, tax or advisory needs please contact us at one of the numbers below: Dublin 01 418 2000 • Longford 043 334 1900 www.rsmfarrellgrantsparks.ie Registered to carry on audit work and authorised to carry on investment business by the Institute of Chartered <strong>Accountants</strong> in Ireland (ICAI). Chartered <strong>Accountants</strong> Ireland is the operating name of ICAI. RSM Farrell Grant Sparks is a member of the RSM International network. The RSM International network is a network of independent accounting and consulting firms each of which practices in its own right. RSM International is the brand used by the network which is not itself a separate legal entity in any jurisdiction. © RSM Farrell Grant Sparks 2013.
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