Big4.com Analyzes Ernst & Young’s Operating Performance in 2011

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One-of-a-kind study reveals unique insights into the world’s largest accounting firms: Deloitte, Ernst & Young, KPMG and PricewaterhouseCoopers PwC. Ernst & Young’s revenues grew at the slowest pace from 2010 to 2011 among the Big Four firms.

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Ernst & Young had strong growth across the entire network. Yet it lagged other firms in revenue increase % from 2010 to 2011. Gap with KPMG narrowed.

Big4.com, the premier social networking forum for professionals and alumni of Accenture, Andersen, BearingPoint, Capgemini, Deloitte, Ernst & Young, KPMG and PricewaterhouseCoopers PwC announced today the release of the 2011 Big Four Firms Financial Performance Analysis, providing a detailed financial and operating analysis of the performance of the four largest accounting firms in the world. The analysis shows the firms enjoyed outstanding revenue growth from 2010 to 2011 after a severe revenue decline in 2009, and stabilization in 2010, to solidify a rebound arising from the global economic slowdown. 2009 marked an abrupt reversal of five straight years of double-digit revenue growth.

Ernst & Young

Ernst & Young’s combined worldwide 2011 revenues for the year ending 30 June 2011 were US$22.880 billion, increasing 5.3% in local currency terms from the comparable period in FY 2010 of US$21.255 billion in global revenues. In US dollar terms, the revenue jumped 7.6% from 2010 to 2011. Ernst & Young noted strong growth in all four geographic areas, revenue increases in all service lines, historically high headcount and new high-profile audit clients. E&Y said that growth was largely organic with acquisitions adding only 0.5% to annual growth rates.

Ernst & Young took the third spot behind PwC and Deloitte at $22.880 billion, and KPMG maintained its position as the smallest of the Big Four firms at $22.710 billion, just $170 million behind, as the gap narrowed against E&Y. Again, interestingly KPMG had only 0.9% more growth in local currency terms than E&Y (6.2% for KPMG versus 5.3% for E&Y), however the foreign sources of where this growth was realized in terms of changes against the US dollar turned out to be favorable for KPMG in 2011. US currency growth for KPMG at 10.1% was 2.5% more than that for E&Y at 7.6%.

Assurance Services had FY 2011 revenues of $10.561 billion, which was up 2.3% in local currency terms, and 5.0% in US dollar terms from FY 2010 revenues of $10.061 billion. Global Tax Services with FY 2011 revenues of $6.011 billion was up 4.1% in local currency terms and also up 6.0% in US dollar terms from FY 2010 of $5.671 billion. Advisory Services with FY 2011 revenues of $4.304 billion was up an astounding 15.3% in local currency terms, and even stronger 17.5% increase from $3.662 billion in FY 2010 in US dollar terms. Transaction Advisory Services with FY 2011 revenues of $2.004 billion, had a 5.7% increase in local currency terms and revenues grew 7.7% in US dollar terms from $1.861 billion in 2010.

In terms of geographies, Americas had FY 2011 revenues of $8.981 billion, which increased 6.1% in local currency terms, and 7.3% in US dollar terms from FY 2010 revenues of $8.373 billion. EMEIA with FY 2011 revenues of $10.075 billion was up 4.5% in local currency terms and also up 5.5% in US dollar terms from FY 2010 of $9.551 billion. Asia-Pacific with FY 2011 revenues of $2.532 billion was up 10.0% in local currency terms, but increased 18.4% from $2.138 billion in FY 2010 in US dollar terms. Japan had FY 2011 revenues of $1.292 billion, which was down 2.0% in local currency terms but up 8.3% in US dollar terms from FY 2010 of $1.193 billion.

Ernst & Young noted that Brazil saw organic revenue growth of 26%, while India grew 22%, Africa was up 19%, Chinese revenues zoomed 18% and CIS grew 16% from 2010 to 2011.

Ernst & Young made a key change to their reporting of revenues in 2009, electing to show combined, not consolidated revenues by eliminating intra-firm billings. E&Y restated its 2008 revenues down from $24.5 billion as originally reported to $23.0 billion reported as restated in 2009. The reason provided for this change was, “In line with our globalization efforts to harmonize policies across member firms, revenues for 2009 and 2008 related to member firm billings to other member firms have been eliminated from the financial information presented here. This financial information represents combined not consolidated revenues, and includes expenses billed to clients.”

This analysis may be reproduced or distributed in parts or whole, but prominent and full attribution should be given at all times to “The 2011 Big Four Firms Performance Analysis by http://www.Big4.com.”

Disclaimer: Big4.com believes in these numbers, but does not guarantee their accuracy.

The full study can be downloaded as Adobe pdf at http://www.big4.com/analysis.

A summary video is available here.

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Kristy Short
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