The Italian accounting profession is beset
by a series of challenges according to Johannes Guigard. The
industry veteran tells Carolyn Canham about a
critical pensions dilemma and shares his thoughts on a lack of
leadership at the national level.
The global financial crisis is affecting the accounting profession
in many jurisdictions but Italy is feeling it worse than most. A
survey of Italian firms by the International Accounting
Bulletin in April this year found the economic downturn was
affecting the revenue of firms. The survey revealed market growth
of just 3 percent, the worst result for Italian firms in at least
five years. The growth was also the lowest among any markets the
publication had surveyed over the previous 12 months and
considerably less than the 14 percent increase in combined revenue
reported in the 2007 Italy survey.
The profession has not been helped by the
performance of Italy’s economy. The GDP contracted by 1 percent in
2008. The International Monetary Fund predicts a 5.1 percent
contraction in 2009 and 0.1 percent contraction in 2010.
One factor that could be exacerbating the
effects of this downturn on the profession is an oversupply of
qualified accountants. Italy has more than 100,000 professional
accountants in a population of 60 million.
In comparison, according to The
Accountant data there are about 30,000 professional
accountants in Germany, which has a population of 82 million;
France has about 18,000 professional accountants and a population
of 65 million.
The UK has a far higher concentration of
professional accountants than Italy, let alone the other European
countries, with a population of 62 million and more than 200,000
members of the five chartered accountant bodies (not counting those
based overseas and those who are retired or honorary).
The combination of a glut of
professionals and the recession means there is not enough work for
accountants and industry veteran Johannes Guigard says competition
Guigard is a member of the Milan chapter of
Italy’s National Institute of Accountants (Consiglio Nazionale dei
Dottori Commercialisti ed Esperti Contabili – CNDCEC). He is also a
member of the European Financial Reporting Advisory Group SMP
working group, chairs the Federation of European Accountants
(Fédération des Experts Comptables Européens – FEE) company law
task force and sits on the United Nations Conference on Trade and
Development Intergovernmental Working Group on International
Standards of Accounting and Reporting.
Guigard says the fierce competition is
amplified by the fact that there are too many micro-practices.
“The practice is normally me and my wife, me
and my brother, me and my son – that’s it,” he says. “There are
just two of us plus maybe 3 to 5 people working for us. As you are
mainly a boutique, when clients start to become fewer or start
asking for fewer services, what can you do? Not much.”
It is a difficult problem to rectify, Guigard
explains, as everyone wants to remain as boutique practices.
“It is very difficult to say ‘let’s merge,
let’s pull together, let’s buy a building of 10 floors, maybe put
the payroll men on the first floor, the budgetary controllers on
the second floor, the accountants on the third floor, it is
impossible, simply impossible,” he adds.
On top of the challenge created by
this inflexibility is the fierce competition from the Big Four, law
firms and payroll service providers.
Guigard says the divide between the Big Four
and the rest in Italy is more extreme than anywhere else in
According to International Accounting
Bulletin data, the average annual revenue of Big Four firms in
Italy is 10 times the revenue of the largest mid-tier firm, Mazars.
In comparison, the average revenue of Big Four firms in Germany is
six times that of the largest mid-tier firm, BDO; the average
revenue of Big Four firms in France is less than three times more
than the largest mid-tier firm, Mazars; and the average revenue of
Big Four firms in the UK is five times that of the largest mid-tier
firm, Grant Thornton.
“[The other Italian firms] don’t really have
much in common with the Big Four,” Guigard says. “The Big Four have
a big structure, they have a big perfectly working system, they
have big profits and of course they have the best clients because
when anyone from outside Italy opens up an office in Italy they
employ one of the Big Four.”
There is also significant competition from law
“In the past 10 years law firms have grown in
importance in Italy because of firms coming from abroad, all the
big international names opened in Italy – in Milan and Rome,”
Guigard says. “There are also some very good Italian law firms and
law firms in Italy can have 50, 60, maybe 100 lawyers, while it is
very difficult to find any accounting firm that has more than 20
On top of the Big Four and the law firms,
there is competition from payroll service providers. Guigard says
there is a payroll service association and theoretically service
providers need to be qualified, but it is difficult to set
boundaries for what non-professionals can and can not do.
“We have non-qualified competition from people
coming, for instance, from the public offices, people working in
the receiver office for instance,” Guigard says. “So now
[professional accountants] are suffering.”
It is mandatory for Italian
accountants to be members of Italy’s national professional body,
The CNDCEC formed officially on 1 January last
year when the two original professional bodies, the Consiglio
Nazionale Dottori Commercialisti (CNDC) and the Consiglio Nazionale
dei Ragionieri (CNR) merged. The law permitting the merger was
passed in 2005 and the entire process, from start to finish, took
about 10 years, Guigard says.
There were some very good reasons for the two
institutes to merge, including the fact that activities performed
by members were “more or less the same”, Guigard explains. But
there was one major stumbling block: the dwindling numbers of
ragionieri and the repercussions this will likely have on
The ragionieri were the members of
the former CNR. Before entering the profession they were required
to obtain a high school diploma. This changed about 10 years ago
when the Italian university system came in line with new European
norms. This meant the prospective ragionieri had to
complete a three-year university degree.
Members of the former CNDC are called
dottori commercialisti. Before entering the profession
they need to complete five-year university degrees. Once they enter
the profession they must practice for three years before they are
Guigard says the changes made to the
ragionieri prerequisites led to far fewer people entering
that stream of the profession – preferring instead to work towards
becoming dottori commercialisti.
Falling ragionieri enrolments led to
the profession fearing for the future of their pension plans. The
pensions of professionals in Italy, for example accountants,
lawyers, architects and engineers, are paid through profession
pension funds. Contributions are made by individuals during their
careers and they can begin receiving a pension when they are
“The problem is… in 30 years time there will
not be money enough to pay the pensions to the ragionieri
who retire as there would be not any more newcomers, but a lot of
pensions to be paid out,” Guigard explains.
The pensions factor was key in merger
discussions and Guigard says it remains a hot topic today as the
funds remain separate. The ragionieri would prefer a
merged pension fund, but many dottori commercialisti are
unhappy with the thought that in 20 to 30 years young dottori
commercialisti will be paying the pensions of the old
In Guigard’s opinion, the reasonably new
CNDCEC is not doing nearly enough to help its members battle the
Sitting below the national institute are about
140 local chapters that are based on Court of Justice
jurisdictions. Each chapter is independent and has elections every
five years. They must, however, follow the rules set out by the
“But the national institute is not working
much, I must say,” Guigard comments.
A lack of direction at national level leads to
problems addressing issues affecting members.
“Some things you can do at local level,”
Guigard says. “For instance if in your region there are some
important issues then of course it is the local members who must
tackle the problem of finding a solution. But if the things are at
a higher level, such as international affairs, there must be
something coming from the national institute. It is difficult.”
Italy is not as attuned to the international
profession as it should be, Guigard says. For example, there is a
lack of international events and thought leadership.
“We need to go international but if we really
want to go international we need somebody doing something to push
it,” he says.
Guigard says that although the Italian
institute is represented on bodies such as the FEE, there is little
evidence of this back in Italy.
“If you are working in the FEE and you produce
a paper, it would be interesting if this paper was posted on the
Italian institute website so that people know we have produced
something, but that is not the case,” he says.
The profession also needs to become involved
in public policy. For example Guigard says there is currently no
input when the state is passing a budget.
“That is something we should be doing but of
course that needs to be organised,” he says. “[National institute
board members] should be promoting the profession. They should be
lobbying to put the profession at the centre of the economic
decisions and working on the international basis… They should also
have national working parties working on matters such as tax and
The national institute is run by a board of 21
people. The figure combines the 11 national board members at both
the CNDC and the CNR, cut to 21 to allow a majority. Members are
elected every three years. However, because of the merger, the
board that was elected in 2008 will stay in power until the end of
2012 to foster stability during the transition period. Guigard says
historically there was a good system for electing the board.
“In the past there was competition between the
individuals, it was possible for anybody to put forward his name
for a position on the national board. He just developed a plan and
proposals and travelled around Italy trying to obtain support from
the local institutes, who vote for the national institute
Now the system is different. Guigard says
candidates must now form parties that together build political
campaigns. The local institutes then vote for the group as a whole.
In the most recent election there were two such groups.
The last election was also split between the
dottori commercialisti and the ragionieri. In the
future the two professions will be combined and the same group will
Seeing the positives
Despite the challenges facing the
profession, Guigard remains optimistic. For example, he says
accounting is still an attractive option for students.
“It is clear that if you go for a degree in
economics it will be easy for you to get a job,” he says. “In any
case we have a large number of dottori commercialisti so
we can’t complain that there are not enough.”
He is also hopeful that the profession will be
able to solve the issue of the pension funds and work towards
“Putting people together and trying to come
out with bigger accounting firms instead of having these
individuals who have their own practice will make us stronger and
more competitive,” he explains.
“I see that now the situation is a little bit
different for everybody, but there is not a big crisis, people are
not saying ‘we don’t know how to survive’. So after all the
profession is still working well, it is well respected, probably we
should be stronger in the control of the national board, but these
are political issues.”
ITALY: QUICK FACTS
Labour force: 25
Labour force by
occupation: Services 65 percent, industry 31 percent,
agriculture 4 percent
GDP growth 2008: -1
GDP projected growth
2009: -5.1 percent
Market value of publicly
traded shares: $1.07 trillion (2007)
Source: CIA World Fact Book