Auditing and assurance revenues accounted for less than half of PwC’s global fees for the first time last year, underlining the shift in the professional services industry towards developing other business lines.
PwC, the biggest of the Big Four firms, will on Wednesday report global revenues of $28.2bn, up 8 per cent on last year. Its assurance division – the traditional heart of any accounting firm – accounted for 49 per cent of fees, down from 57 per cent just three years ago, as its other divisions, tax and advisory, grew far more quickly.
Sam DiPiazza, global head of the firm, predicted that over the next few years, its tax and advisory divisions would continue to grow to about 60 per cent of revenues.
“That’s a strategic objective of ours; we feel both divisions have great potential to grow,” he said. “As the world becomes more global, tax planning is going to require the skills of a firm like ours whether we’re talking strategic planning, repositioning or other tax issues.”
PwC’s firms in Asia, central and eastern Europe and the Middle East and Africa all saw growth in excess of 20 per cent while in South and Central America, it reached 13 per cent. Western Europe – the biggest region, worth 45 per cent of revenues – saw growth of 8 per cent but in the US, which accounts for a third of income, fees rose 2 per cent.
“It was a good performance under what we see as pretty difficult economic conditions,” said Mr diPiazza. “There is a clear trend of developing markets slowing and emerging markets continue to expand pretty rapidly.”
Activity in the US was weakened by the slowing economy and the switch to “AS5”, an auditing regulation that eased the compliance burden imposed by the post-Enron Sarbanes-Oxley regulations, but cut accountants’ fees in the process.
“In the US, assurance saw both regulatory and economic impact in the one year. The regulatory is good, but the economic is not,” said Mr DiPiazza. “We really went at AS5 and were probably more aggressive than some of our competitors.”
On Wednesday, PwC will also announce that its members have agreed a new organisational structure that will bind the firms, which are all independent national partnerships, more closely together in three regional groupings.
“We all like to think in terms of globalisation and it being a flat world these days but really it’s regional and those are the core of business,” said Mr DiPiazza. “Even globalised companies approach the world in a regional way, so being close to the market through regions, but being able to connect them globally, is going to define the profession.”
