Welcome to the second digital supplement of the International Accounting Bulletin.

Looking back through previous World Surveys, there are more than a few re-occurring themes that seem to keep cropping up.

Many of them have cropped up again this year.

These include networks and associations congregating in clusters, with the big generally getting bigger. For the Networks we have the Big Four pulling further away from the mid-tier (the gap between KPMG and BDO is now almost $2bn).

Further down the tables, the gap between PKF in 15th and UHY in 16th now stands at $921.6m, compared to a $758.9m gap last year, and $527m the year before. If this trend continues another year, the gap will be over $1bn in next year’s World Survey – meaning the gap will have doubled in four years.

The rise and rise of advisory

Moving on to the service lines, and it should not really surprise anyone that advisory experienced strong growth among a large number of networks and association, as firms increase focus on advisory services in light of digital developments, increasing need for cross border advice as the political situation becomes more uncertain.

In addition, in some cases the growth was the result firms categorising work which was previously classified as ‘other’ now as advisory.

Unsurprisingly many recorded drops in the other table as a result.

One notable change was 2018 was the year KPMG’s advisory arm overtook its audit business in terms of revenue. EY and PwC are still heavier on the audit and accounting side of things, and there was little move in this regards over the past year. It will be interesting to see this continue to evolve as firms find more ways of making money from advisory.

Struggling Latin America

Looking at the regional tables, the Latin American fee table really stands out like a sore thumb. South America has a number of economies with struggling currencies. More than a few networks and associations reported shrinking revenues when reporting in dollars, and when asked why inflation of local currencies was invariably the answer.

Whether the Venezuelan and Argentinian political and economic situations improve in 2019, and how Brazil performs under the populist new president, Bolsonaro and his finance minister, Paulo Guedes, are likely to be key to whether networks and associations are able to post improved results next year.

Despite these struggles, the picture for the accounting industry remains broadly positive. The majority of those in the tables reported global growth – often strong growth. Technology is changing the industry but also presenting new opportunities and firms seem to be finding more and more cross border work.

And on that positive note, I’ll leave you with the IAB World Survey.

Jonathan Minter, Editor