Big four post best performance since Enron as consulting business booms – .

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Big four post best performance since Enron as consulting business booms – .


The Big Four accounting firms posted their best financial performances since the Enron collapse as corporate clients rushed to transform their businesses during the coronavirus pandemic.

KPMG is expected to report annual revenue of $ 32.1 billion on Thursday, an increase of 10% from 2020. In total, the leading group, which includes Deloitte, EY and PwC, will have achieved a turnover of business of $ 167.3 billion for the fiscal year ended 2021, an increase of 7 percent.

It’s the strongest collective result since the Enron scandal brought down Arthur Andersen in 2002 and reduced the Big Five to the Big Four.

The strong profits come despite continued criticism of the structure and performance of the companies, particularly in audits, including the scrutiny of EY’s failure to identify fraud at Wirecard.

Demand for professional advisers has increased as companies seek to reshape their businesses in response to the pandemic and increasing investor attention to environmental, social and governance issues.

A transaction boom propelled the growth of the advisory arm of KPMG, its largest division, with sales up 17% to $ 13.7 billion, with clients spending heavily on M&A advice, news technologies and cybersecurity.

The growth of ESG consulting and the demand for assurance that companies disclose their impact on clients represent a significant growth opportunity for the industry.

The Big Four are positioning themselves as advisers to companies on how to gain the trust of stakeholders such as employees and the communities in which they operate, despite their own involvement in scandals around the world.

KPMG has committed $ 1.5 billion over three years to invest in ESG, including developing expertise that it can sell to corporate clients, although it did not provide a detailed breakdown of the how the money will be spent.

The Big Four’s dominance in the heavily regulated audit market gives them a “unique and special license” to obtain work in providing ESG disclosures for companies, said Jim Peterson, author of a book on companies.

But he said they would face stiffer competition for supremacy in the ESG advisory market, where they are “a standoff with anyone who thinks they can capitalize” on the demand for advice.

In line with its four big rivals, KPMG recorded the largest increase in revenue in its operations in Asia-Pacific, the smallest of its three regions. Sales there rose 13% to nearly $ 6 billion.

Dominant accounting firms aim for rapid growth in the region, particularly in China, where KPMG plans to increase its workforce by more than half to 20,000 within three years and PwC intends to hire an additional 20,000 people over five years.

Like its peers, KPMG’s growth was slowest in the Americas, where sales increased 6% to $ 11.9 billion.

Total sales rose 10 percent in the 12 months ending in late September, after rebounding from a slight contraction in the prior year.

The firm, which has 236,000 partners and employees in 145 countries, remains the smallest of the Big Four, which are structured into legally separate partnership networks around the world and do not disclose their global benefits.

Sales of KPMG’s tax and legal services business jumped 8% to $ 7 billion while audit revenue rose 4% to $ 11.5 billion after falling 1% in last year.

Like its competitors, KPMG has said it is investing in audit quality after a series of scandals. He is the subject of legal proceedings and the subject of several investigations into his UK audits, including with collapsed government contractor Carillion.

The UK accounting regulator also alleged that KPMG provided false or misleading information to its quality inspectors. The UK government has threatened to ban the company from winning public contracts after an industry court said in October that KPMG made a false defense in misconduct hearings for which it had been fined of £ 13 million.

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