30 Jan 2014 11:06am

Deloitte replaces PwC as biggest global firm

Deloitte has overtaken PwC as the world’s largest firm by income

Deloitte reported fee income of $32.4bn last year, just ahead of PwC with $32bn. EY came third with $25.9bn, followed by KPMG with $23.4bn, according to a survey from International Accounting Bulletin (IAB).

Deloitte’s lead is mainly on the back of advisory work with the Big Four firm increasing its advisory fee income by $4.5bn since 2008. Advisory revenues at PwC only increased by $2.4bn in the same time period. The slender lead, however, may be short-lived with PwC takeover of American firm Booz & Co – worth expected revenues of $1bn – awaiting regulatory approval.

The gap between third-ranked EY and fourth-placed KPMG has increased by $1bn in the past year to $2.4bn. In 2011 the fee income difference between the firms was only $170m.

The Big Four maintained its dominance of the market with more than two-thirds (67%) of global accounting market share.

Overall the 50 top global accounting networks and associations grew by an average 3% in 2013, earning a combined $169.7bn in fee income. The rate of growth dipped for the second time since 2009 – from 5% last year to 3%, driven by downward pressure on fees, increased regulatory scrutiny and intense competition across the industry, according to the IAB.

The shift towards advisory services has continued, with audit now accounting for only 48% of revenues in the Big Four and 51% of revenues in the mid-tier of firms. Since 2004 the Big Four combined have increased their advisory revenues by over $29bn while audit & accounting revenues increased by $13.1bn and tax work revenues by $8.6bn in the same time period.

Almost two thirds of respondents cited an increase in fee pressure for the dip; and almost half said they are worried fee pressure has led to a decrease in audit quality.

The market has come under increased regulatory scrutiny recently. In October, the Competition Commission backtracked on its controversial requirement for UK companies to tender for a new auditor every five years, while the UK was outvoted at European Union level over the imposition of mandatory rotation.

Among associations only five of the 25 reported a revenue decrease due to members lost. There have been several changes in the ranking, with Praxity retaining top spot as the largest global association.

Raymond Doherty


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