Big 4 accounting firms reap record-high revenues

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Fri, December 2, 2022 | 02:26

Big 4 accounting firms reap record-high revenues

Posted : 2022-10-05 16:31

Updated : 2022-10-06 11:38

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Management advisory and consulting services led major accounting firms' record-high revenues in 2021

By Anna J. Park

The big four accounting firms in Korea posted all-time-high annual revenues last year, due mainly to double-digit year-on-year growth rates recorded in M&As and consulting services.

According to data available from the electronic disclosure system operated by the Financial Supervisory Service (FSS), the aggregated annual revenues of the four largest accounting firms ― Samil PwC, Samjong KPMG, EY Korea and Deloitte Korea ― stood at 3.18 trillion won ($2.24 billion) in 2021, a 21.8 percent increase from the previous year's 2.61 trillion won. It is the first time that the total amount of the firms' annual revenues exceeded the 3 trillion won mark.

Graphic by Newsis

Samil PwC logged the highest annual revenue among the big four firms. It posted an annual revenue of 1.2 trillion won in 2021, a 21.68 percent jump from the previous year. The annual revenue combined the 888.5 billion won earned from its accounting entity and 343.8 billion won from consulting.

Samjong KPMG posted an annual revenue of 761 billion won in its past fiscal year, which is a 22.7 percent year-on-year increase. It took two years for the company's annual revenue exceed the 750 billion won mark, since it first reached 500 billion won in 2019.

EY Korea logged a total revenue of 627.9 billion won, up 18.78 percent year-on-year. It reaped 436.4 billion won from its accounting entity and 191.5 billion won from EY Consulting. Yet, when considering the revenue reaped from its consulting firm, its year-on-year increase rate stood at a whopping 53 percent.

Deloitte Korea's revenue last year stood at 566.7 billion won, a 24.34 percent surge from the previous year. In particular, the revenue of Deloitte Consulting soared to 119 billion won from the previous year's 81.1 billion won, a 46.6 percent year-on-year increase.

As seen in the case of Deloitte Korea, the big four firms' double-digit year-on-year growth rates were due mainly to management advisory and consulting services. On average, the year-on-year increase rates of the firms' management-related advisory services stood at 25.68 percent, which is well above the 10.19 percent year-on-year increase rate posted in the audit sector or the 4.73 percent in taxation.

Despite the impressive growth, market watchers remain cautious whether this boom enjoyed by major accounting companies could continue in coming years. These growth rates are regarded as exceptional, stemming from unique market conditions of ample liquidity and accelerated corporate transformations temporarily created in the wake of the pandemic.

Now that global macroeconomic conditions are resulting in rapid changes, corporate clients' demand for M&A deals and other advisory services is expected to decline this year due to soaring interest rates and tightened global monetary policies.

"The revenue increase has already been clearly slowed, compared to the same period of last year. While management strategic advisory and consulting services tend to have a longer contract term, M&A deals are usually completed within six months. Thus, the slowed growth of M&A advisory services will be reflected immediately in their revenue figures," a market insider said.

annajpark@koreatimes.co.kr Article List