One of the most common questions that I encounter about my job (and I suspect the experience of my colleagues has been similar), from people both within and outside of the profession, is, “Isn’t writing about accounting boring?”
When I started covering accounting in 1998, the profession was in the midst of a major transformation. Two forces, consolidation and consulting, promised to permanently alter the accounting landscape.
Business was booming for CPAs. Consulting services were driving double-digit growth, even at firms below the Big Six. According to Accounting Today’s 1998 report, the 100 largest firms in the nation racked up combined revenue of $25.5 billion that year, a whopping 21 percent over 1997. More than 42 percent of that revenue came from management advisory services, while just 33 percent came from audit and accounting. Audits were commodities, given away for next to nothing in hopes of winning lucrative consulting contracts.
Andersen Worldwide reigned as the nation’s largest accounting firm, fueled largely by its consulting arm. KPMG Peat Marwick & Ernst & Young called off a proposed merger, while Price Waterhouse and Coopers & Lybrand tied the knot, whittling the then-Big Six down to the Big Five. The consolidators, American Express Tax and Business Services, Century Business Services and H&R Block, burst onto the scene and swallowed up dozens of large regional firms.
Florida granted non-CPA firms the right to compete head-to-head against traditional CPA-owned firms.
Now fast forward to 2003. The accounting profession is once again undergoing a major transformation. This time, the words that are shaking things up are “Sarbanes” and “Oxley.” The scandal that sank Arthur Andersen also helped put an end to the self-regulation of the accounting profession. The Public Company Accounting Oversight Board has taken over setting audit standards for public companies. The public’s confidence in our markets, and in the CPA profession, has taken a major hit.
The Big Five are the Big Four, and all but one of them have jettisoned their consulting practices. Audit fees are on the rise.
The 100 largest firms in the country garnered $28.5 billion in revenue, and more than 40 percent of it came from audit and accounting. Only 18 percent came from management advisory services. The CPA world is still shrinking via mergers, but it’s no longer the work of the consolidators swallowing up large firms in desirable markets. As a matter of fact, we haven’t heard much from AmEx, CBiz, or Block in a while. The deals are happening at the local level. A look at the Newswire shows that we’ve reported on five local/regional mergers in the last three weeks alone.
That’s the long answer to that question. The short answer is, there hasn’t been a dull moment in the accounting profession since I started.
Register or login for access to this item and much more
All Accounting Today content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access