When I read an article sent to me by a 2020 member my heart sank.
BDO announced that they had the second largest number of publicly quoted audits was the title of the article. I reached for my phone to contact some friends within the Big 4 and Top 10 firms seeking further clarification. It turns out that BDO do have the second largest number of listed audits and that these audits are primarily on the smaller side which of course should not surprise any of us.
The reason my heart sank was that BDO have for years been positioning themselves as advisors to entrepreneurs and have been very successful along with RSM, Grant Thornton and the like.
With a background within the accounting profession for my entire 35 year career and a strong bias towards marketing, these two positions are not compatible. It is, in my opinion, nigh on impossible to be seen primarily as an auditor for listed companies whilst simultaneously being primarily an advisor to the entrepreneurial sector of the business community.
The only firms that could possibly have the resources and capabilities to carry both strategies would be the Big 4. That said, the profitability of the owner managed business sector has typically not been sufficiently high enough to warrant a place at the table for the Big 4 and, typically has ended up holding second place to advising the large listed companies across the globe.
This analysis seems and feels correct in that the Big 4 are geared up to successfully advise and audit global companies with global issues and be fairly rewarded in that sector. For those same firms to then provide profitability to the same level when providing advisory services to the entrepreneurial sector seems to me that would hold second position in a Big 4 firm.
However, with the likes of Grant Thornton, BDO and RSM, the strong regional firms such as Barber Harrison & Platt, Old Mill and others are primarily aimed at helping entrepreneurs. There is clarity for the market when an accounting firm announces that it specialise in helping entrepreneurs and this clarity attracts entrepreneurs to these accounting firms.
With the exception of Covid-19, which is accelerating the digitalisation of accounting firms and is forcing firms to resize, reshape and refocus, the overall strategy of serving the entrepreneurial community rests comfortably from the fifth largest firm in the world and below.
The strong regional firms are often larger than national firms in their patch and are therefore more than capable of providing a full range of services to the entrepreneurial community and they compete very well with national firms whilst holding their independence.
After that, the smaller independent and the sole practitioners have shone through Covid-19 as being more capable than any other group of accounting firms to a rapid response scenario demanded by Covid-19.
The accounting profession generally is coping admirably with Covid-19 and responding well to a very dynamic market.
If there is one profession that we think lends itself to the skills of helping businesses through Covid-19 it would be the accounting profession!