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March 22, 2022

TALKING HEADS: International Accounting Bulletin: End of Review 2021

By Zoya Malik

Global CEOs spoke to Zoya Malik about their views on this year’s market challenges, company milestones and their predictions for 2022. The C-suite executives interviewed comprised Malcom Ward, AGN International; Mark Koziel, Allinial Global; Dr. Christian Gorny, ETL Global; Liza Robbins, Kreston Global; Alun Morgan, Kudos International; Tony Sczcepaniak, LEA Global; Anton Colella, Moore Global; Andrew Leck, MSI Global Alliance; Tim Wilson, Nexia International; Helen Jennings, Praxity; Steve Heathcote, PrimeGlobal; Stephen Hamlet, Russell Bedford and Jean Stephens, RSM

Zoya Malik: How has your organisation grown over the past year through the pandemic? Where has this growth come from in terms of service lines and regions?

Mark Koziel – Allinial Global: We have seen significant growth, adding 24 members (5 LATAM, 6 US, 8 EMEIA, and 5 APAC firms) and revenues over $US580m. I believe this is the largest new firm growth of any of the associations or networks. At the same time, we lost 8 firms with revenue of about $US25m. Of the lost revenue, over 50% was due to members merging into other firms outside of Allinial Global.

Andrew Leck – MSI Global: Professional services are in the main coping well and within MSI we have seen the demand for professional services increase. Our overall combined member firm fee income has increased by 3.8 %. More than 80% of our member firms in EMEA, Americas and Asia Pacific regions, reported an increase in activity over the past 12 months, with fewer than 5% reporting a decrease. Most firms reported that they were “taking up new opportunities”; this was particularly high in the Asia Pacific region where 80% reported this to be the case.

Tim Wilson – Nexia International: The latest International Accounting Bulletin (IAB) World Survey announced in March this year that Nexia International had risen one place since last year to become the 8th largest global accounting network, as measured by fee income. In 2020, Nexia’s total fee income was $US4.5bn across the network – an increase of 5% on 2019. We expect there to be a further 5% growth in 2021. Throughout 2021, Nexia has continued to expand its global presence by welcoming new member firms in North Macedonia, Turkey, Latvia, Turkmenistan, and France.

Helen Jennings – Praxity: The Alliance has an average annual growth rate of 9.1%. The main growth is in Audit and Tax. The hardest hit service line during the early stages of the pandemic was M&A but this has come back well to show strong growth. The biggest growth region is Latin America.

Stephen Hamlet – Russell Bedford: From our AGM in October 2020 to October 2021, total revenues increased by 18%. It was pleasing to see this come from existing member firms, showing a net increase in revenues of 11%, and from the recruitment of new members, adding a further 7%, and showing the increasing importance firms are placing on belonging to an international network during these challenging times.

Steve Heathcote – PrimeGlobal: We are proud to report a combined annual firm revenue of $US3.5bn, with an unprecedented 20% revenue increase in 2021. Our firms experienced: strong organic growth particularly in advisory services (12% growth), increases in staff (21% growth to 29,000) and growth in location coverage (now with coverage in over 941 locations). We welcomed 34 new member firms. Asia Pacific grew by a staggering 247% and EMEA by 17%. 7 new Sub-Saharan Africa firms joined covering 7 countries and we increased Top 100 US firms to 12 (from 11).

Zoya Malik: What have been the reasons for this growth?

Malcom Ward – AGN International: There has been a buoyant corporate finance market – with many organisations having accumulated significant amounts of cash, and plenty of bargains being available particularly in retail, leisure and entertainment sectors. In addition, members have assisted clients with accessing government support schemes, and helped with restructuring of their business and their financial arrangements.

Liza Robbins – Kreston Global: The Kreston Global brand was launched in March 2021 (from Kreston International to Kreston Global) and this brand refresh was supported by a new website and more advanced digital marketing. The awareness of the Kreston Global brand is increasing and we enjoy very high loyalty from our member firms who provide outstanding testimonials to potential firms considering membership. Member firms are attracted to Kreston Global’s high ranking globally, but with the ability for firms to maintain their independence.

Alun Morgan – Kudos International: We are a relatively young international network so, in many locations, the addition of new members is not restricted by the objections of existing member firms seeking to maintain geographical exclusivity.Kudos has vacancies in every region and is extremely keen to welcome new member firms with a focus on quality.

Tony Szczepaniak – LEA Global: The pandemic has driven a lot of activity in advisory, as clients look to improve their business performance, and in tax particularly from various Furlough schemes and response to legislative changes, i.e. Brexit. We are also seeing an increase in international client work, both for existing clients who are expanding into new and emerging markets, and new clients who are leveraging the global reach of our association.

Steve Heathcote: New members know they are joining a forward-looking community which shares best practices on emerging opportunities such as Diversity, Equity and Inclusion (DEI) and Environmental Social Governance (ESG). Over 300 best practice examples were shared with firms in 2021. This has attracted high quality progressive firms. We targeted recruitment to address members future needs. This included recruiting an experienced Chinese national to lead our Asia Pacific plan. We developed market specific value propositions particularly targeting China.

Anton Colella – Moore GlobalI believe that one of the main reasons for our growth is our culture. Moore Global has always had a strong focus on relationships, and we have seen further increases in inter-firm collaboration over the past 12 months. This drives more value for clients and has led to an increase in business for our network firms.

Zoya Malik: What tech investment has been made across your organisation to add value to your clients? What level of investment has been made and into which areas?

Malcolm Ward: Technology driving practice digitisation has been a theme since well before 2020, but the adoption of accounting and business tech was accelerated by the pandemic, especially for client facing and workflow systems that supported remote working practises and the attendant security needed. According to the recent AGN Digital Transformation survey some 78% of members assess that their digital maturity is as good if not better than their direct competitors.

Mark Koziel: Being a tech-focused organization we are shifting all tools and resources to cloud and virtual. In 2021 we migrated to a cloud-based accounting system and CRM, and we’re working toward a new website and member portal to increase connectivity among member firms.

Tim Wilson: Nexia is currently piloting a cyber security program across the network, Nexia Protect,which has been developed to mitigate the exposure to threats, through a standardised technology and risk-management approach. The program has been designed to elevate the security standards within the network and move towards alignment with industry security standards (e.g., NIST, CSA, ETSI and CMMC).

Christian Gorny – ETL Global: With regard to audit, ETL GLOBAL is currently heavily investing into the expansion of the ETL Global Cloud. The ETL Global Cloud is a platform with which our member firms can automatically extract data from the client’s ERP system and analyse the data to formulate an audit opinion. In addition, the data lake which builds the backbone of our ETL Global Cloud presents the opportunity to deliver value-added insights for the client. Finally, ETL GLOBAL has developed a platform solution for SME clients. This platform will not only help them to exchange information and documents securely and efficiently with their advisors but also allow them to manage their business on one single platform. The platform integrates operational front-end systems with payment functions and with bookkeeping systems so that all information and tasks can be handled in one single environment.

Zoya Malik: What key milestones has the company achieved this year?

Malcom Ward: We did a lot of work on diversity and inclusiveness, with our inaugural AGN Women of Impact awards in 2021. This sits beside a suite of AGN tools and initiatives, webinars and training programmes aimed specifically at the ‘next generation’ of practice leaders and potential owners.

Liza Robbins: Kreston Global celebrated its 50th anniversary in 2021. This provided a focus area for global celebrations in Kreston Week (27 September – 1 October 2021). We launched our Purpose journey, as an active engagement with stakeholders in the “why” behind the network. Kreston is developing its own lexicon around ESG, CSR and UN Sustainability goals.

Alun Morgan: The global introduction of a new Kudos International branding platform including the new logo, branding handbook and the brand strapline “By your side” which encapsulates the long term, supportive and close nature of the relationships that Kudos members develop between one another and with each of their clients.

Tony Szczepaniak: The addition of 5 new firms and our first in-person event, in September, since January 2020.

Andrew Leck: At the end of July this year, I took on the role of CEO of MSI Global Alliance after a thorough transition period from MSI’s predecessor. We are delighted to welcome 15 new members to MSI this year and have overall seen an increased number of referrals within our membership. One of the highlights of this year has been our 2nd virtual International Conference with over 550 registered attendees.

Tim Wilson: The key milestones include becoming the 8th largest global accounting network, delivering over 85 virtual events in the past year with 9,345 attendees and a seamless transition to a hybrid work model for the global office.

Helen Jennings: Appointing new CEO Samantha Louis to replace Graeme Gordon, who is leaving Praxity on 31 December 2021 after 11 years in the role.Samantha is a Chartered Management Accountant, highly skilled in international advocacy.

Steve Heathcote: Record annual firm revenue growth of over 20%, our first ever DEI conference with over 300 global attendees, independent member survey showing 83% satisfaction and countries covered breaking the 100 mark.

Jean Stephens – RSM: We launched a global innovation platform that allows colleagues to submit new ideas and engage with a wider community to foster collaboration, innovation and positive change. We built on the success of the RSM Academy programme, which was delivered virtually across all regions with nearly 300 participants. 2021 saw the introduction of quarterly Women in Leadership Summits, which are open to all RSM employees. Candice Eaton Gaul, Global Diversity and Inclusion Leader, raises important topics for discussion to this wider audience to ensure that we continue to challenge ourselves and grow in our D&I journey.

Zoya Malik: What has the experience been like for workers across your member firms? Has work been office based, hybrid or from home?

Mark Koziel: Firms are still trying to figure this out, so we’ve provided a resource guide on flexibility to help members navigate these challenges. Some are trying to get employees back in the office. Others have used flexibility as a strategic advantage. Firms with remote options are realizing they need managing partners for their virtual offices as well. It’s not “one size fits all” but rather a “one size fits one” strategy. The UK, Australia, Canada, and the US seem slightly more advanced in offering these options. Some EU countries expect to return to full office working in the future, along with some pockets in Latin America and Asia.

Alun Morgan: Members report that the key to success has been to offer a level of flexibility that meets with the staff personal life balance objectives whilst still aligning, not only with the firm’s strategic goals but also, and often overlooked, the clients preferences for how the service should best be delivered. We have not observed significant differences between countries.

Tony Szczepaniak: This varies by region and size, with North America and Europe largely returning to office based and hybrid models (typically 2-4 days in the office). Smaller firms tend to be a combination of office based, where staff numbers are low and technology or client needs warrant more person-based solutions, and entirely virtual. We also find it depends on the local laws and restrictions, with developing economies imposing harsher restrictions until vaccines are more widespread for example Mauritius, and large parts of Africa.

Andrew Leck: In our recent survey we asked members about the future and the impact of the pandemic on working practices: Over 65% of surveyed member firms from all three regions (EMEA, Americas and Asia Pacific) reported that there would be a mix of home and office working going forward. There was an overall view that staff would be given greater flexibility to continue to work from home. Fewer than 7% of member firms saw a reduction in working hours. The results also suggested that there were some potential concerns about productivity when it comes to sustained remote working.

Helen Jennings: Praxity Executive Office and all member firms successfully transitioned to employees working from home in the early stages of the pandemic. This has morphed into working from anywhere and is likely to evolve into a hybrid/working from home model. It’s worth noting that member firms in certain countries such as Australia and New Zealand returned to 100% office much earlier than in other jurisdictions although they have had to revert to a hybrid model.

Steve Heathcote: Firms bring teams together in person, or virtually, when there is a clear objective. In the US, because of the talent shortage, firms have been most flexible. In Asia and Latin America, the trend has been to bring teams into the office, albeit less frequently. In the UK there is a lot of diversity between firms.

Jean Stephens: RSM International has invested significantly in a global e-learning platform built with the needs of RSM professionals in mind. We are delivering our annual RSM World Conference in December with the theme of ‘Mission Transform’. In the second year of hosting this virtually to an even wider audience, we are excited to be joined by world-leading speakers, who alongside RSM thought leaders will cover ground-breaking topics, cutting-edge services, people empowerment and new horizons in geopolitics and global trade.

Zoya Malik: What have your main priorities been in term of hiring and retaining staff, and providing incentives, over 2021?

Mark Koziel: We continue to focus on transforming our organization, realigning some roles and outsourcing others. As an example, we reassigned components of the IT function by hiring an outsourced CIO with years of firm and association experience and his support team. As we’ve replaced positions, we’ve also expanded all searches beyond Atlanta-based talent. We’ll continue to look for ways to combine outsourcing, technology, and remote talent with our organization.

Christian Gorny: Incentives and retention schemes include in particular flexibility in terms of workplace and schedule as well as opportunities for personal development through internal exchange programs and trainings.

Liza Robbins: Firms have, typically, offered a work-life balance, flexible working conditions (hours and location) and an increasing commitment on society issues e.g. net zero. Since September 2021, firms are once again participating in the global secondment programme.

Tony Szczepaniak: Talent has been and remains an area of concern for most practices. While many upsides remain (hybrid and virtual environments expand the geography of the talent pool, reduced commuter costs, work life balance and increased focus on employee mental well-being), a number of challenges persist, including a knowledge gap in more junior talent, driven by the lack of “osmosis” or learning that comes from being in an office environment, working closely with mentors, and a departure of seasoned and talented professionals at the mid and senior levels, who are simply leaving the industry to pursue different paths.

Tim Wilson: Nexia recruited Alastair McTavish as its new Learning and Development Manager in January. Alastair’s role enables more member firm employees to upskill and benefit from high quality training and performance support. Nexia has further enhanced its capabilities by recruiting two new IT and Digital managers to help implement a new IT strategy for Nexia as well as review, develop and improve its technology capabilities across the network. I was recruited to replace Kevin Arnold as CEO. I moved to Nexia from MSI Global Alliance.

Helen Jennings: Retention within Praxity Executive Office has been 100%. The priority was to appoint a new CEO. Retention within member firms is above average. Member firms have not suffered from the ‘great resignation’ to the same extent as would appear in other organisations within the profession.

Steve Heathcote: Our priority has been engagement to develop and achieve our Strategy and embed an inclusive culture. A committee of PrimeGlobal staff and member firm volunteers was established with the goal being to infuse DEI conversations and insights into the very fabric of the associations and firms’ strategies.

Stephen Hamlet: We established a relationship with an external specialist; providing online health and well-being resources and monthly webinars on topics including working from home, coping with stress, looking after oneself (physically and mentally) and time management. We also offered an Employee Assistance Programme. Our firms have told us that, in order to compete, it has been important to offer flexible working conditions, accepting that their practices may never return to what was expected prior to the pandemic. Empathising with employees’ personal circumstances and looking at working patterns that were most suitable for them, was important.

Zoya Malik: What is the outlook for your company in 2022? Any new plans and initiatives? 

Malcom Ward: The unprecedented activity in industry consolidation looks set to continue into 2022. It appears there are dozens of larger firms, investment houses and technology businesses seeking to grab market share, or even create brand new business models. This activity may be driven by the pursuit of economies of scale and cost reduction through technological innovation or opportunities in the provision of relatively sophisticated regional accountancy outside of major conurbations.

Mark Koziel: Now that countries are opening up, we anticipate even greater firm-to-firm commerce and networking. Firms are all challenged with finding talent to get the work done, and price increases are necessary in most markets. Revenue will be up but profitability may take a small hit as salary increases outpace client fee increases in the short term. Growth of new services and greater automation can minimize this effect.

Christian Gorny: In 2022, ETL GLOBAL will continue to expand through acquisitions with the goal to become the leading supplier of professional services for SME clients in selected focus markets. Looking at the pipeline of potential acquisitions we expect to grow our business inorganically by 25% compared to 2021. In addition to our M&A activity we will invest heavily in the development of IT-based solutions which should help our partners in the digitalisation and automation of their services. Having an IT company like eurodata as a 100% subsidiary in the ETL group will give us the opportunity to achieve this goal efficiently and effectively.

Liza Robbins: Kreston Global has a very strong outlook. We have a loyal membership base, increasing brand awareness and a strong pipeline of new firms. A key focus area for 2022 will be supporting firms in the implementation of ISQM1 and 2.

Andrew Leck: What we have seen in the last 18 months is accelerated change and that will continue. I see L&D programmes as a very valuable benefit for our members to help them develop their own future leaders from within their firms.

Helen Jennings: Praxity’s three-year strategy to 2024 has been refreshed in line with its vision to be “an alliance of high-quality firms, rooted in collaboration and trust, recognised as the best-in-class alliance”. The strategy has three main objectives, to ensure member firms have an attractive and compelling proposition for potential international clients, to service member firm’s international clients with excellence through global reach and great client service and to support member firms through timely networking, knowledge sharing and collaboration.

Steve Heathcote: We aim to realise value from our significant investment in a technology enabled engagement platform. We will create a range of community groups to enhance members learning, particularly adoption of technology to support advisory services. We are launching a major initiative to provide practical support to help firms get started with ESG services.

Stephen Hamlet: At Russell Bedford, we shall start working promptly on the list of immediate priorities in our Strategic Positioning paper. We look forward to the return to physical events and once again meeting our people around the world. Some new initiatives will include the creation of a Culture committee to be responsive to, and promote proactive leadership in, contemporary and enduring issues such as DEI, ESG and CSR. I also see more opportunities in specialist areas and in diversification, with the increasing development of technology and new markets, for instance, in crypto assets, and the need for certain firms to become specialists in these fields and to join networks, supplementing the more traditional services of existing member firms.

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