This is Accounting Services Marketing Research and can include information on the background, market structure, definitions, competitors, trends and developments of accounting and is related to other topics such as auditing and bookkeeping and financial statements.

Table of Contents

[edit] Background

The scope of services offered by accounting firms is expanding rapidly. Advances in technology, coupled with changes in clients’ demands, are enabling and encouraging increasing numbers of accounting firms to offer a wide array of services in addition to traditional accounting, auditing, attest, bookkeeping, and tax services. In addition, the requirements to comply with the Sarbanes-Oxley financial reporting requirements has greatly increased the need for publicly-traded corporations to augment their accounting staffs. At the same time, recent financial scandals over back-dating of options at public firms and other problems has further cast scrutiny on proper accounting procedures. All of these have added impetus to the growth in accounting in the past few years

Traditionally, the Big Five accounting firms were Andersen Worldwide, PricewaterhouseCoopers, Ernst & Young, Deloitte & Touche, and KPMG. dominated the global market in 1998 with combined global revenue exceeding $58 billion, well over half the industry’s total revenue. In terms of revenue growth, the late 1990's were strong for the Big Five, attributable primarily to the boom in consulting services. Andersen Worldwide led the pack with net revenues of $13.9 billion, a 23 percent increase over 1997. On average, fees from management consulting services accounted for nearly half of all the revenue earned by the top eight accounting firms in fiscal year (FY) 1998, surpassing the revenue generated by accounting, auditing, attest, and tax services combined. The July 1998 merger of Price Waterhouse and Coopers & Lybrand to form Pricewaterhouse- Coopers created the largest accounting network in the world, whose FY 1998 net global revenue exceeded $15.3 billion.

Today, the Big Five have been reduced to the Big Four with the collapse of Andersen resulting from the Enron scandal. They include Price WaterhouseCoopers, Deloitee Touche Tohmatsu, Ernst & Young and KPMG. Two other players have significant revenues. BDO International and Grant Thornton International, each have almost $3 billion in annual billings and have 30,000 and 25,000 employees respectively.

[edit] Market Structure

As seen by the push to greater reporting to comply with Sarbanes-Oxley and other requirements, the number of accounting establishments has continued to grow after 2000. The impact of consolidations in the industry has probably muted even more growth that would have occurred in number of establishments.

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This industry employs a significant number of people for the American economy. The number of accountants in the industry mirrors the growth in number of establishments. Both of these are up over 15% in five years and it is likely the number of those employed in the industry will expand further through the end of the decade.

The industry, despite the presence of the Big Four, is still only moderately concentrated. The four largest players account for over 20% of industry revenues while the top 50 still only control less than 50% of industry revenues. Many small and mid sized businesses turn to small local accounting firms in their local geographic area.

Concentration of Revenue by number of firms in the industry is as follows:


Total Number of firms       Revenue as % of all firms in the industry

     4 largest                              21.6%
     8 largest                              28.0%
    20 largest                              42.1%
    50 largest                              47.0%

Market Metrics==

As described above, demand for accounting services has been consistent and growing for the past several years. The revenue line for the industry will likely trend upwards further out in the decade.

[edit] Recent Trends and Developments

Accounting firms and certified public accountants (CPAs) nationwide have begun offering a wide array of services in addition to traditional accounting, auditing, and bookkeeping services. This trend is partially a response to clients’ demand for “one-stop shopping” for all their professional services needs. Another cause is the relatively flat growth in demand for traditional accounting and auditing services over the past 10 years and the desire of CPAs to develop more value-added services. The addition of management consulting, legal, and other professional services to the practice mix of large national accounting networks is transforming the industry and has engendered the new category of MDPs (multi-discplinary practices).

Many firms now offer technology consulting because of growing client demand for Internet and electronic commerce services. A recent survey of CPA clients indicates that keeping up with technology is the strategic issue of greatest concern to clients, followed by recruiting and retaining staff, competing with larger companies, planning for executive succession, and maximizing productivity.

CPA firms will continue to develop their capabilities and/or alliances to meet clients’ demands. Some other areas of expansion among accounting firms are administrative services, financial and investment planning services, general management services, government administration, human resources, international operations, information technology and computer systems consulting, litigation support, manufacturing administration, marketing, and research and development.

A trend toward consolidation is under way in the accounting industry. Many small and medium-size independent firms are merging or forming alliances with large service companies such as American Express Company, H&R Block Incorporated, and Century Business Services. Consolidation is causing a decline in the number of independent accounting firms that offer only tax and accounting services. The large increase in revenue among the top 100 accounting firms in the late 1990s may be partially attributable to this trend toward consolidation.

[edit] Sources

• Most current US government sources

[edit] ResearchWikis Related to Accounting Services Marketing Research

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