Asian players to take on Big Four accountants
Greig Cameron
INFLUENTIAL Scottish accountant Sir David Tweedie believes the global audit monopoly of the largest firms will be broken by new players emerging from Asia.
The incoming president of the Institute of Chartered Accountants of Scotland (ICAS) believes the Big Four – KPMG, Ernst and Young, Deloitte and PwC – are unlikely to have their dominance challenged in the short term especially as many smaller firms would be unable to handle the global requirements of many corporations.
Instead he believes the growth of Asian companies, particularly in China, will lead to the creation of large accountancy firms from there, which will go on to acquire mid-level firms in other territories including the UK.
Sir David said: "The status quo cannot really stay indefinitely but it should be a matter of natural evolution, not revolution.
"I think the emergence of a big five or six will come out of Asia. If you look at China particularly they are not keen on Anglo-Americans coming in and running the accounting for them – they want to build their own firms.
"These huge Chinese national companies are now spreading worldwide looking for tie-ups.
"My view is the monopoly will change as the Asian firms will go looking for firms below the Big Four and adding them in as partners."
ICAS prepared a report on accounting reform in China last year and has a strong relationship with the Ministry of Finance in Beijing.
The Scottish body is also preparing a framework document helping Chinese accountants better understand and implement the judgment decisions required under International Financial Reporting Standards.
However, even with wider international reach Sir David, the former chairman of the Inter-national Accounting Standards Board and the UK Accounting Standards Board, admits that repairing the damage done to the reputation of the profession during the global financial crisis is a long-term project.
He said: "There is work to be done in restoring confidence and trust in business and in the profession – including preparers of financial statements and auditors. Increased transparency and clearer communication will be pivotal to this.
"A key to a good business is corporate governance and the board challenging decisions.
"Ultimately you have to have people in there who say this is not right and I am not going to stand for it. When I started my accountancy career in the 1970s, values and ethics were dripped onto me.
"Under today's spotlight that tone at the top needs to be even more visibly evident; with values and integrity literally dripping through an organisation.
"Organisations and individuals that push ethical considerations to the heart of their strategies will stand a better chance of sustaining success over the long term."
ICAS believes more questions need to be asked in the debate over Scottish independence.
Sir David added: "We want the decision to be a considered decision.
"Our role is to say here are some questions that should be answered by both sides, so let us have the answers and then have an informed proper debate.
"So there will be financial, rather than political, questions we will be putting to both sides based on what our members are asking."
In his year-long tenure as ICAS president, which starts on April 20, Sir David hopes to introduce a non-graduate route into the profession and improve availability of advice to smaller businesses.
Greig Cameron
INFLUENTIAL Scottish accountant Sir David Tweedie believes the global audit monopoly of the largest firms will be broken by new players emerging from Asia.
The incoming president of the Institute of Chartered Accountants of Scotland (ICAS) believes the Big Four – KPMG, Ernst and Young, Deloitte and PwC – are unlikely to have their dominance challenged in the short term especially as many smaller firms would be unable to handle the global requirements of many corporations.
Instead he believes the growth of Asian companies, particularly in China, will lead to the creation of large accountancy firms from there, which will go on to acquire mid-level firms in other territories including the UK.
Sir David said: "The status quo cannot really stay indefinitely but it should be a matter of natural evolution, not revolution.
"I think the emergence of a big five or six will come out of Asia. If you look at China particularly they are not keen on Anglo-Americans coming in and running the accounting for them – they want to build their own firms.
"These huge Chinese national companies are now spreading worldwide looking for tie-ups.
"My view is the monopoly will change as the Asian firms will go looking for firms below the Big Four and adding them in as partners."
ICAS prepared a report on accounting reform in China last year and has a strong relationship with the Ministry of Finance in Beijing.
The Scottish body is also preparing a framework document helping Chinese accountants better understand and implement the judgment decisions required under International Financial Reporting Standards.
However, even with wider international reach Sir David, the former chairman of the Inter-national Accounting Standards Board and the UK Accounting Standards Board, admits that repairing the damage done to the reputation of the profession during the global financial crisis is a long-term project.
He said: "There is work to be done in restoring confidence and trust in business and in the profession – including preparers of financial statements and auditors. Increased transparency and clearer communication will be pivotal to this.
"A key to a good business is corporate governance and the board challenging decisions.
"Ultimately you have to have people in there who say this is not right and I am not going to stand for it. When I started my accountancy career in the 1970s, values and ethics were dripped onto me.
"Under today's spotlight that tone at the top needs to be even more visibly evident; with values and integrity literally dripping through an organisation.
"Organisations and individuals that push ethical considerations to the heart of their strategies will stand a better chance of sustaining success over the long term."
ICAS believes more questions need to be asked in the debate over Scottish independence.
Sir David added: "We want the decision to be a considered decision.
"Our role is to say here are some questions that should be answered by both sides, so let us have the answers and then have an informed proper debate.
"So there will be financial, rather than political, questions we will be putting to both sides based on what our members are asking."
In his year-long tenure as ICAS president, which starts on April 20, Sir David hopes to introduce a non-graduate route into the profession and improve availability of advice to smaller businesses.
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