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ACCOUNTING AND FINANCIAL MANAGEMENT - UK - FEBRUARY 2018

Published By :

Mintel

Published Date : Feb 2018

Category :

Banking

No. of Pages : N/A

Many recent acquisitions by major accountancy firms have revolved around the technology space, such as big data, analytics and digitisation, which is playing an increasingly important role in consultancy services. This trend is set to continue, with larger firms looking to strengthen their multi-disciplinary skills and advisory practices through medium?sized or boutique bolt?on acquisitions. Cyber security and risk consultancy companies also remain popular acquisition targets for accountancy firms.

Larger firms are also increasingly forming strategic alliances with technology and software companies to be at the forefront of technology innovation. Greater use of automation, cloud computing, big data analytics, digital platforms and increasingly AI, are set to remain key focuses of investment in the accounting industry for the foreseeable future.

Table of contents
EXECUTIVE SUMMARY
The market
Figure 1: Segmentation of the UK market for accounting & financial management, by type of service, 201317
Figure 2: Forecast UK market for accounting & financial management, 201822
Figure 3: Forecast segmentation of the UK market for accounting & financial management, by type of service, 2018 and 2022
Market factors
Figure 4: Number of private sector businesses in the UK, 200317
Companies
What we think
KEY INSIGHTS
What are the implications of Brexit on the UK accountancy sector?
What are the likely implications of HMRC’s plans for “Making Tax Digital” for accountants?
How are the recently introduced audit reforms affecting mid-tier accounting firms?
How is new technology, such as artificial intelligence, impacting the audit sector?
INTRODUCTION
Definitions
Methodology
Abbreviations
Market Positioning
UK economy
Overview
Figure 5: Forecast GDP development 2017-23
Figure 6: UK GDP quarterly development, 2004-17
Inflation
Interest rates
House prices
Figure 7: UK House price changes, 2006-2017
Consumer spending
Manufacturing
Figure 8: UK manufacturing, 2014-17
Business investment
Figure 9: UK GFCF, chained volume measures, seasonally adjusted, 2004-17
Imports
Exports
MARKET FACTORS
Key Points
Legislation and Government Policy
CMA audit order and new EU regulatory framework on statutory audit
Impact of Brexit on EU audit reform
New audit threshold
New UK accounting standards
Large accounting firms under spotlight in clampdown on tax avoidance schemes
Measures put in place to crack down on tax avoidance
Finance Bill 2017-18
Companies Act shake-up
Scottish tax devolution
HMRC move towards digital tax services
Other Market Factors
Number of active businesses in the UK
Figure 10: Number of private sector businesses in the UK, 2003-17
Figure 11: Number of private sector businesses in the UK, 2003-17
Figure 12: Number of VAT and/or PAYE registered enterprises in the UK, by industry group and turnover size band, 2017
Rapid rise in self-employment since 2008
Figure 13: Self-employed workers in the UK, 2006-17
Trends in insolvencies and business recovery
Figure 14: Number of company insolvencies, receiverships and administrations in England & Wales, 2007-17
Corporate credit conditions
UK M&A market remains resilient in 2017, despite uncertain economic and political backdrop
Figure 15: Mergers and acquisitions involving UK companies, 2005-17
Number of listed companies on a downward trend
Figure 16: Number of main market and AIM listed companies, 2009-17
Figure 17: Number of main market and AIM listed companies, 200917
MARKET SIZE AND SEGMENTATION
Key points
Overview
Consultancy sector is key driver for market growth as accountancy firms expand their service offering
Accountancy firms adopt new business models to diversify or specialise
Figure 18: The UK market for accounting & financial management, 2013-17
Figure 19: The UK market for accounting & financial management, 2013-17
Market segmentation
Overview
KPMG is top listed company auditor, PwC is top FTSE 100 auditor
Figure 20: Segmentation of the UK market for accounting & financial management, by type of service, 201317
Figure 21: Segmentation of the UK market for accounting & financial management, by type of service, 2013 and 2017
Audit & accounting
Rise in audit threshold putting pressure on lower end of auditing market
Audit fees at lower end of the market remain squeezed but fees are more stable at the top end as competition focusses on quality of audits
Innovative technology solutions enable auditors to deliver continually higher audit quality and deeper insight
Figure 22: UK fee income from audit & accounting services, 2013-17
Tax services
Government clampdown on tax avoidance schemes
Panama and Paradise Papers leaks reveal global industry of tax avoidance packages in offshore tax havens
Regulatory changes and tighter tax rules stimulate demand for tax advice and compliance services
Implications of Making Tax Digital for accountants
Figure 23: UK fee income from tax services, 2013-17
Consultancy
Accountancy firms expand consultancy function and multi-disciplinary skills through strategic acquisitions
Technology, analytics and digital play increasingly important role in consultancy services
Accounting firms face increased competition in consultancy services sector
Brexit-induced uncertainty stimulates demand for consultancy services
Figure 24: UK fee income from consultancy services, 2013-17
Figure 25: UK fee income from consultancy services, 2013-17
Corporate Finance & Business Recovery
Insolvency practitioners struggle with a more sustained economic recovery
But more uncertain economic outlook could see more UK businesses fall into financial distress
Brexit could challenge UK’s leading position in cross-border restructuring
Figure 26: UK fee income from corporate finance & business recovery services, 2013-17
Overseas trade in accountancy services
Figure 27: International trade in accountancy services, 2012-16
Figure 28: Exports and imports of accountancy services, 2012-16
MARKET TRENDS & ISSUES
Key points
Market trends & issues
FTSE 250 audit market to remain preserve of the ‘big four’ for the foreseeable future
Adoption of new technologies to drive increased automation and improved quality of audits
Lower end of the audit market is becoming increasingly uneconomical for auditors
Accounting firms continue to strengthen their consultancy arms and multi-disciplinary skills
As digital technology represents a key driver for the consultancy services sector
Strong demand for cyber security advisory services, as ‘big four’ become the globe’s largest cyber security consulting firms
Regulatory and risk consultancy services continue to show strong demand growth
Buoyant M&A activity as accountancy firms look to rapidly expand consultancy capabilities
Accounting firms are moving into legal services
‘Big four’ tap into start-up and SME market
Cloud computing is transforming the accounting industry
‘Big data’ and data analytics represent key growth areas for accountants
INDUSTRY STRUCTURE
Key points
Industry development
Figure 29: Top 20 accounting firms in the UK, by fee income, 2017
Mid-tier firms are also on consolidation course
Figure 30: Analysis of the changes in the structure of the UK accounting, bookkeeping, auditing and tax consultancy industry, 2013-17
Structure by Employment
Figure 31: Analysis of the employment structure of the accounting, bookkeeping, auditing and tax consultancy industry, 2016 and 2017
Structure by Turnover
Figure 32: Analysis of the financial structure of the UK accounting, bookkeeping, auditing and tax consultancy industry, 2016 and 2017
Figure 33: Analysis of the financial structure of the UK accounting, bookkeeping, auditing and tax consultancy industry, 2017
COMPANY PROFILES
RSM UK HOLDINGS LTD (FORMERLY BAKER TILLY UK HOLDINGS LTD)
Figure 34: Segmental turnover analysis of RSM UK Holdings, 2017
Figure 35: Financial Analysis of RSM UK Holdings, 2013-17
Company strategy
BDO LLP
Company performance
Figure 36: Financial Analysis of BDO, 2013-17
Company strategy:
DELOITTE LLP
Deloitte combines nine European member firms effective from 1 June 2017
Recent acquisitional activity, investments and partnerships
Deloitte follows rivals into legal services market
Financial performance
Figure 37: Segmental turnover analysis of Deloitte, 2017
Figure 38: Turnover analysis of Deloitte, by industry, 2017
Figure 39: Financial Analysis of Deloitte, 2012-16
Company strategy
ERNST & YOUNG LLP
Financial year 2017 sees record investment in technology by EY
Figure 40: Segmental turnover analysis of EY, 2017
Figure 41: Financial Analysis of Ernst & Young, 2013-17
Company review and strategy:
GRANT THORNTON UK LLP
Recent acquisitions and developments
Figure 42: Segmental turnover analysis of Grant Thornton, 2016
Figure 43: Financial Analysis of Grant Thornton UK, 2013-17
Company strategy:
Company performance and outlook:
KPMG LLP
Figure 44: Segmental revenue analysis of KPMG, 2017
Figure 45: Financial Analysis of KPMG, 2013-17
Company performance:
MAZARS LLP
Figure 46: Segmental turnover analysis of Mazars, 2016
Figure 47: Financial Analysis of Mazars, 2012-16
Company performance
MOORE STEPHENS LLP
Figure 48: Segmental turnover analysis of Moore Stephens, 2017
Figure 49: Financial Analysis of Moore Stephens, 2013-17
Company strategy:
PRICEWATERHOUSECOOPERS LLP
Figure 50: Segmental turnover analysis of PwC, 2017
Figure 51: Financial Analysis of PwC, 2013-17
Company review & strategy:
Clients are number one
Growth underpinned by technology
People empowerment
Backing the tech revolution
Integrity and promoting standards
SMITH AND WILLIAMSON HOLDINGS LTD
Figure 52: Financial Analysis of Smith & Williamson Holdings, 2013-17
Company strategy:
MARKET FORECAST
Key points
Market prospects
UK economic outlook remains positive despite backdrop of Brexit-induced uncertainty
Acquisitions, partnerships and alliances to continue to revolve around the technology space
Figure 53: Forecast UK market for accounting & financial management, 2018-22
Figure 54: Forecast UK market segmentation for accountancy & financial management, by type of service, 201822
Audit and accounting
Tax services
Consultancy
Corporate finance and business recovery
Figure 55: Forecast UK market segmentation for accounting & financial management, by type of service, 2018-22
FURTHER SOURCES & CONTACTS
Trade and professional associations
Association of Chartered Certified Accountants (ACCA UK)
Chartered Institute of Management Accountants (CIMA UK)
Chartered Institute of Public Finance Accountancy (CIPFA)
Institute of Chartered Accountants in England and Wales (ICAEW)
Institute of Chartered Accountants Scotland (ICAS)
Trade exhibitions
Accountex 2018
CIPFA annual conference 2018
Trade magazines
Accountancy Age
CCH Daily inc. Accountancy Live
Tax Advisor
Taxation
The Accountant

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