1. IAB key trends, rankings and research in 2013 Ana Gyorkos, Editor For BKR International, Dublin www.internationalaccountingbulletin.com

2. A brief introduction…

3. www.internationalaccountingbulletin.com Global analysis of network and association performance in 2012 – sneak peek for 2013 Key global trends (M&A, service lines etc.) Regional trends Special analysis: China and Africa Where does BKR International stand? What does the future holds? Q&A Running order

4. www.internationalaccountingbulletin.com 2012 – faltering growth

5. www.internationalaccountingbulletin.com Facts & Figures 45 surveyed networks/associations 22 Networks 23 Associations $165.4bn overall market fee income Networks have 88% market share globally Big Four have 67% market share globally 48% of overall fees earned are from Audit & Accounting services 23% from Tax 29% from advisory services 23% networks/associations reported a decrease in annual fee income 11% networks/associations reported double digit growth

6. M&A – from prediction to reality www.internationalaccountingbulletin.com As growth stalls in developed markets, M&A presents an opportunity for growth PKF International hit most in 2012 as BDO International firms merge with its Australia, UK and part of China operations Large single firms in the US merging: LarsonAllen and Clifton Gunderson, JH Cohen and Reznick Group Big Four focusing on advisory acquisition especially in the IT and analytics sector Not many Big Four firm takeovers in 2012 Large scale M&A expected to increase into 2013 Firm leaders engaged in increasing number of discussions regarding potential M&A activity

7. www.internationalaccountingbulletin.com Networks Networks 6% to $145bn Grant Thornton International overtakes RSM as 6 th largest network, leading by $194.2m Nexia International claims back place of 10 th largest network by overtaking PKF International Top 10 networks fee income 6.5% in fy12; in fy11 up 8%

8. www.internationalaccountingbulletin.com Associations Associations - growth flat Total fee income $20.3bn No change in the top 10 ranking IGAF Polaris rebrands as PrimeGlobal Top 10 associations fee income 0.4% in fy12; in fy11 up 7%

9. www.internationalaccountingbulletin.com World survey 2013 sneak peek Deloitte took over PwC as largest global network – advisory services race heats up as assurance declines BDO revenues expected to increase significantly (key economies such as the UK, South Africa, China…) Decrease in revenues expected for PKF International and potential decrease for RSM Several moves between member firms – some associations seeing a decline year-on year while new ones are being set up Another year of growth expected and the increase in top 10 market share

10. www.internationalaccountingbulletin.com Audit: under pressure Fee pressure continues to rise Audit margins decreasing – pressure to increase efficiency Standard compliance – still no plan on IFRS in US and Japan Regulatory oversight Decrease in client loyalty Increasing statutory audit threshold

11. www.internationalaccountingbulletin.com Regions

12. www.internationalaccountingbulletin.com Growth by Country: IAB

13. www.internationalaccountingbulletin.com Big Four

14. www.internationalaccountingbulletin.com North America

15. www.internationalaccountingbulletin.com South America

16. www.internationalaccountingbulletin.com Asia-Pacific

17. www.internationalaccountingbulletin.com Europe

18. www.internationalaccountingbulletin.com Africa and Middle East

19. www.internationalaccountingbulletin.com Revenue vs. Staff

20. www.internationalaccountingbulletin.com China Strongest mid-tier market – Since 2013 Ruihua the 3 rd largest firm in the market Big Four under regulatory pressure Significant push to develop strong domestic players, which could become large international players – by the MoF and CICPA Shinewing and Reanda International different way of approaching international expansion Concerns over audit quality of domestic firms as they move towards international clients. Software and quality control improvements needed

21. www.internationalaccountingbulletin.com China

22. www.internationalaccountingbulletin.com Emerging opportunities - Africa Why Africa? In 2013 IAB Africa survey a combined 25 networks (14) and associations (11) took part – combined fee income of over $2bn Mid-tier revenues between $1m (Key Will Group) to $108.8m (Praxity/includes Mazars) Accounting networks and associations have significantly increase their investment in the continent Big Four looking to integrate practices For mid-tier associations and networks difficulty to find member firms Fears of corruption, quality and talent shortages Countries to watch out for

23. www.internationalaccountingbulletin.com Regulation, regulation, regulation

24. Regulation all around Regulation in the market becoming extremely fragmented, but business increasingly global European debate awaiting trilog (Council, Commission and Parliament) – mandatory rotation an option – directive or regulation UK Competition Commission US congress stops PCAOB mandatory rotation debate India Companies bill resulting in challenges and opportunities for the mid-tier www.internationalaccountingbulletin.com

25. Biggest Issue www.internationalaccountingbulletin.com

26. What the future holds www.internationalaccountingbulletin.com More M&A among firms globally Continued fee pressure though some improvements in sight Increased expansion across regions of Africa Increased public scrutiny of tax work Pressure to find niche advisory work Increased regulation compliance work Capping staff numbers in developed markets Being able to work truly internationally becoming an even bigger challenge due to regulation

27. www.internationalaccountingbulletin.com Thank you For more information visit: www.internationalaccountingbulletin.comwww.internationalaccountingbulletin.com Follow us: @WAI_news Follow me: @AnaGyorkos Email: ana.gyorkos@timetric.com