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World Accounting Review 2009

Published: January 2010

By: VRLWorld Accounting Review

This report, written by experienced industry observers, is based upon proprietary qualitative and quantitative research. It combines exclusive market surveys over the past year from The Accountant and International Accounting Bulletin. These are the only publications that provide an accurate and full assessment of this globalised profession - the firms and professional bodies that operate within it.

About this report:

Each country survey considers the most recent available data to profile the performance and strategy of firms and professional accounting bodies. Analysis includes:

- Growth and performance. Using fee income and staff tables, the report demonstrate how firms are performing in key markets, revealing what factors have created and restricted growth.

- Industry landscape. Market share and key firm metrics for the leading firms in each market.

- Regulation. How changes have reshaped markets, plus further directions in regulation.

- Forecasts and trends for 2010. Expectations and views from senior figures in the profession.

- Recruitment and retention. A major theme for the profession is recruitment. The issue relates not simply to graduate recruitment, but finding and retaining staff with experience to meet the requirements of the industry.

- CPD/training. Institutes have a key focus to provide good courses for students and profile data for institute members.

Includes data and analysis on the major players in;
Australia, Canada, China, France, Germany, India, Italy, Japan, Mexico, Poland, Russia, South Africa, South Korea, Spain, Sweden, The Netherlands, Turkey, United Kingdom and the USA.

The global credit crunch that began squeezing the world since the second half of 2008 has already left scars in a number of territories, presenting challenges for accountants and the professional bodies that represent them.

Despite an oft-made comment that the accounting profession is recession-proof, firms are starting to fee the ill effects of recession as revenues decline and job cuts spread to all corners of the world.

Firms in developing markets, in particular those from Asia, have managed to weather the financial crisis better than others. In fact some Asia-Pacific markets are growing and fast.

The same can’t be said of mature western markets in Europe and the Americas, although in most cases average firm revenue growth has outperformed GDP growth of respective economies.

This report, written by experienced industry observers, is based upon proprietary qualitative and quantitative research. It combines exclusive market surveys over the past year from The Accountant and International  Accounting Bulletin. These are the only publications that provide an accurate and full assessment of this globalised profession - the firms and professional bodies that operate within it.

Part  1 – of the report considers developments in NAFTA:

USA– The global economic crisis began in the US and its effects are still reverberating through the US profession. However, not all of the effects have been negative, as industry leaders see the troubled times as a chance for the accounting profession to come to the fore. The effects the economic downturn is having on the US accounting profession are varied. There are the more predictable side affects, such as job losses and tightening of clients’ purse strings, and the more unusual, such as politicians interfering with accounting standard-setting.

Mexico – The Mexican accounting profession and economy in general have experienced tough times, hit hard by the combined forces of the subprime crisis and swine flu. Yet the profession is still working on a number of strategic initiatives, including IFRS convergence and a new strategic plan. Firms in this market are still motoring on as the affects of the crisis have not yet hit hard.

Canada – Canada’s accounting bodies have a lot to deal with including the implementation of IFRS and international standards on auditing (ISAs) have been leading considerations, as are various strategic initiatives aimed at ensuring a continuing supply of accountants to meet market demands. Canadian firms surveyed have begun noticing the affects of the credit crisis and although 2008 figures were respectable, 2009 is already shaping as a much more difficult struggle.

Part  2 – Selected European Markets, including:

The Netherlands –  Dutch  accounting  firms have noticed  fee pressure,  much  fiercer competition for audit work and consolidation among smaller firms. It’s tough and a flagging economy presents a bleak outlook for players of all sizes. Job cuts have hit some firms

A planned merger has topped the agenda for the two major Dutch accountancy bodies. There has been talk of a merger between the Royal Dutch Institute of Accountants (Koninklijk Nederlands  Instituut  van  Registeraccountants  –  NIVRA) and  Nederlandse  Orde  van Accountants-Administratieconsulenten  (NOvAA) for years, which includes one  failed attempt to combine in 1999. Ten years later the process is again underway, with the institutes signing an intention to merge in November last year.

Germany – The German accounting profession has been feeling the pressure over the past couple  of  years. New local and European laws mean new responsibilities for institutes, regulators and firms, who have been busy responding to the economic crisis.

Although managing to keep stable revenues in 2008, German firms are preparing for one of the worst economic contractions in Germany’s history. Audit revenue is flat, while transactions related work has dried up.

France – Elections at both French institutes, the European Commission and European Parliament   mean   changes  in  personnel  and   policy.  Simplification,  wrangles  over independence and the profession’s code of conduct have kept French auditors, accountants

and regulators busy over the past 18 months. European and international issues, including the financial crisis, meant the profession’s focus has been wider than previous years when France’s institutes focused on internal consolidation.

UK – The global economic downturn is dominating the thoughts of all the UK professional services institutes as they grapple with the potential challenges and opportunities it presents. Meanwhile, the five major bodies all continue to expand their global influence.

Part  3 – Selected Other Markets

China – Another strong year for firms in one of the best performing markets in the world. Revenue growth of 20 percent and above was the norm as firms increase their headcounts exponentially.

China’s government has unveiled plans to create huge domestic firms to tackle Big Four domination. This has lead to a consolidation rush among mid-tier players jockeying for position.

This exciting market is evolving rapidly and adopting global standards and best practices in order to increase its influence worldwide. All accounting networks have their eye firmly placed on China and are investing vast amounts of money and resource in this market.

India – The accounting world’s gaze has been on India this year and in the most part not for positive reasons. The revelation of the nation’s largest-ever corporate fraud, which took place at Satyam, has shaken the profession and left it battling to find explanations and solutions. However, the year has not brought all bad news. Although the global financial crisis has affected India, the impact has been nowhere near as severe as it has been in the Western world. Mid-tier firms in general enjoy robust revenue growth.

At the same time, the nation’s two largest professional accounting bodies are busy with a raft of projects, both at home and abroad. Student and member growth at both the Institute of Chartered Accountants in India (ICAI) and the Institute of Cost and Works Accountants of India (ICWAI) has also been strong.

South Africa – A new Companies Act tops the agenda for the South African profession this year. The precise details of changes to assurance requirements are still being hammered out, but no matter which direction they fall, the accounting profession will be affected. There is other regulation on the minds of firms, including the introduction of IFRS for SMEs – South Africa became the first country to adopt these standards.

Meanwhile, the traditional challenges of a chronic skills shortages and a demographical imbalance remain. Firm revenue growth is strong in this fast developing economy but finding enough staff to cope with demand remains a perennial problem.

Australia - It has been a year of change and growth for the Australian accounting profession. The three major professional accountancy bodies all grew their membership numbers, made strategic changes and looked to expand their presence and influence further abroad.

Meanwhile, the profession has grappled with a number of challenges, not least the global financial crisis, while a landmark review into the Australian taxation system and an imminent national water accounting system are providing work for the institutes and the profession at large.

Australian firms continue to be the best performing in the Western world and average growth for 2009 largely remains in positive territory.


Part 1 – considers developments in NAFTA

Part 2 – Selected European Markets, including:

Part 3 – Selected Other Markets


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