BDO Australia answers the question ‘How do I find the best accountant for me?’

12 July 2018 Consultancy.com.au

Finding an accountant that fits with the culture of a business can be as challenging as running a business itself. There needs to be a solid connection between management and an accountant to ensure that advice flows freely and is not encumbered by any issues of trust, miscommunication or a general lack of enthusiasm. Experts at BDO Australia provides insight on what makes a good match.

The process of finding an accountant or swapping accountants for SME business owners is one of the fundamental pillars of running a successful business. Accountants are, or at least should be there for more than solely lodging tax returns explains BDO Australia. “Some of the most common complaints SMEs make about their accountants are not about price but about value. They may not provide enough value based on the business’ needs and give advice which is not forward thinking enough to help them make effective decisions.”

Thinking ahead with the trajectory of SMEs, anticipating growth and advising are core responsibilities that will serve a clients specific needs. These are what make accounting experiences excellent. Ultimately, if there is a lack of oversight, insight or advice then how can an accountant “help you get what you want out of your business?” The experts at BDO share some basic tips on figuring out if an accountant is the right fit before they get into the nitty gritty stuff.

Some of the most basic and yet at times overlooked bits of advice that the accountancy and consulting firm share are to do with location, communication and confidence. The firm raises the question; “Can you get hold of your accountant and access to advice, when and where you need it?” The answer to this simple question should be unequivocally yes and if it is not, then there is obviously an error in the relationship.

The necessity to have an accountant who listens is also paramount to ensuring efficiency and effectiveness. When choosing an account, the firm says “if you don’t feel like you’re being listened to in your first conversation, it’s likely your feelings won’t change. After your initial meeting, ask yourself ‘am I confident this adviser will help me get what I want out of my business?’”

BDO Australia answers the question ‘How do I find the best accountant for me?’

Choosing a new accountant

Whilst there may be multiple factors that will arise when deciding, BDO highlight the main external factors which depend on individual circumstances. The firm asks five questions that will help make that decision about the size of the firm, their location and specialty, the extent of their services, price and the relationship overall.

Are they a big firm or small boutique agency?

BDO believe that it’s all about the size of the company in question. Whilst larger firms have a bigger span of experience and more profound depth of expertise, small or boutiques can offer more niche services, potentially valuing the relationship due to a limited number of clients they can possibly service. “It depends. You need to know that the accounting services provider has sufficient resources to best service your needs now and into the future.”

Where are they based and what do they specialise in?

The firm contends that it is important to look beyond professionalism and but not location. As all accountants will attempt to come across as professional, understanding how they can conduct their services specific to any certain business is also important. Judging this one must look through the suit and tie and focus on the specifics of the engagement. On the other hand however, for BDO, location is something that cannot be overlooked.

“Some accountants will argue that location is less important with today’s technology and cloud based solutions which allow for online access and collaboration. However, there are simply always going to be some matters that are better dealt with face to face. Ask yourself, how could I get my accountant to meet me when and where I really need them to?”

What are the extent of their services?

“It can be hard to know every service you will need at the start of a relationship with a new accountant. It is useful to understand the wider capabilities of an accounting firm and how well they can support your business needs now and into the future.”

What do they charge?

The firm suggests that when deciding on price it is important that when choosing a potential candidate, price is not the only factor. As accounting services come in a range of shapes and sizes, price will (nearly) always be competitive and should be always evaluated through the equation of Value = Experience/Price. “As with most things, you get what you pay for. All accounting providers can give you a reasonable expectation of fees going forward. You need to ensure this is in line with your expectations and what your business can afford.

What is the relationship going to be like?

“Arguably this is the most critical of all aspects. It is vital that you feel comfortable with your new accountant and that they are a good fit for both yourself and your business. Ask yourself, did you really feel comfortable and assured when dealing with this person? While all Chartered Accountants are bound by a duty of confidentiality, it is still very important that you feel comfortable discussing what can be at times very sensitive and personal information. Trust is important to any successful accounting and SME relationship.”

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Big Four accounting and consulting firms booming in Australia

12 February 2019 Consultancy.com.au

The Big Four professional services firms – EY, Deloitte, KPMG and PwC – are enjoying a sustained boom in Australia. Services in consulting and financial advisory, which are more lucrative than accounting and assurance work, are driving local growth for the world’s largest advisory and accounting firms.

Looking at the development of Australia’s economy combined with client demand, 2019 looks set to be another good year for the country’s burgeoning professional services economy. While firms of all shapes and sizes are booming, though, Australia's professional services growth is in no small part due to the exceptional growth posted by the Big Four firms, leading Stuart Kells, co-author of a new book titled ‘The Big Four’ to describe their dominance as “proportionally larger to anywhere else” in the world.

The aggregated revenue of PwC, Deloitte, EY and KPMG topped $7 billion in the last financial year. Together the Big Four employ more than 25,000 staff across Australia, led by a total pool of almost 2,500 partners. Of these consulting behemoths, Deloitte has undoubtedly been the fastest grower in the last three years, seeing a 32% jump in revenue to $2 billion. In terms of growth, KPMG followed in second spot, with 27% growth, but it remains in fourth spot in terms of its revenues of $1.7 billion, behind EY, which grew by 20% to $1.8 billion. The market leader in Australia, PwC, saw its revenues rise to nearly $2.4 billion.

Revenue of the Big Four accounting and consulting firms in Australia

While the Big Four do have a reputation for buying up smaller competitors to inflate their performance, the booming revenues of the firms are partially built on organic growth, especially in areas experiencing high demand, such as cybersecurity, digital consulting and automation. At the same time, a drive to move into new areas of services, such as legal, design thinking, digital and creative services has boosted growth – but inescapably, the largest part of the Big Four’s success is due to their relentlessly aggressive campaigns of M&A.

Deloitte, which is biggest of the group at global stage, has taken over a staggering 28 companies in the nation in the past four years – featuring purchases of everything from an identity security company to a virtual reality illustration firm – including data science consultancy Connected Analytics, and Microsoft cloud partner Mexia. As for KPMG, it made 16 acquisitions in the past four years, including the recent move for innovation consultancy UDKU.

Elsewhere, PwC purchased companies which drive infrastructure projects, a stake in an advertising agency, as well as buying up corporate restructuring and deals business PPB Advisory in 2018. EY meanwhile snapped up a tax law firm, two data analytics units and a market research firm, among others, and continued this spree early in 2019 with the acquisition of Plaut IT

Consultants the money makers

While the bulk of the traditional media remain steadfast in their descriptions of the Big Four firms as ‘auditors’ or ‘accountancies’, this has long since ceased to capture the diverse and wide-ranging nature of these multifaceted companies. Audit is now just a side-business for the world’s largest professional services players, with the percentage of revenue derived from their core service of auditing financial statements falling to an all-time low in Australia of between 14% and 21% in 2019. The decline in importance of auditing work to the Big Four can be attributed to three major factors.

Global revenue of the Big Four firms (US$ / billion)

First, the companies that buy auditing services from the Big Four have typically become unwilling to pay a premium which the firms require to properly carry out the statutory work. They are instead looking to smaller rivals including BDOGrant Thornton and RSM, which charge lower fees. This is particularly the case in the mid-market auditing scene, where top 20 firms beyond the leaders are enjoying growing demand.

Second, the Big Four have come under mounting scrutiny regarding their audit portfolios. In 2016, Greg Medcraft, the then-outgoing chairman of ASIC, told The Australian Financial Review that the quality of auditing in Australia was "appalling", and went as far as to warn that it could lead to an Enron-style corporate collapse in the near future (Enron's collapse in the US led to the downfall of Arthur Andersen).

As a result, the Big Four have come to see auditing work as an increased risk, with little room for manoeuvre, and a low potential for positive press, as if they do audits well, it gains no attention. At the same time, if things go wrong, the negative press can sting them for months. Reputation damage has hit the Big Four hard in several countries globally, including Germany, the Netherlands, South Africa, the UK and the US.

Finally, the Big Four are shifting their attentions to consulting for the simple reason that it earns more. The margins for consulting work are usually higher than their traditional areas of business. An analysis of EY’s revenues for instance shows that last year assurance margins were 35%, compared to almost 50% for consulting and cyber-security work. At the end of the day, then, the departure from the Big Four’s origins is driven by the fact that consulting is now where the big money is made, so focus on consulting is growing at a much faster rate than the audit divisions of the quartet, both in in Australia, and as part of a global trend.

Related: Australia’s management consulting market set to expand in 2019.