E&Y Audit, Advisory Income Up by 0.6pc
Ernst & Young Switzerland’s audit and advisory fees income have increased as of 30 June 2011 by 0.6 percent to CHF 510.3 million, putting the business consulting and accounting firm back on course for growth.
To ensure that it remains on course for growth, Ernst & Young invests about 10 percent of its fee income in education and training for its staff every year. Ernst & Young said it welcomes global efforts to enhance the importance accorded to financial statement auditing. However, Ernst & Young considers that some of the regulatory proposals tabled by the EU in this context are not conducive to this aim.
“Given that market conditions remain difficult, this achievement should be rated as an exceptional success. And it shows that we are well placed – as regards both strategy and organization – to continue to build on our already strong market position,” said Bruno Chiomento, Chief Executive Officer of Ernst & Young Switzerland.
Fee income of CHF 267.7 million (-2.2 percent) was earned in Audit and Assurance Services.
“Thanks to its market share of 40 percent, Ernst & Young continues to occupy first place as auditor of SMI companies. We are also firmly established in the market for midsize companies,” said Thomas Stenz, Chairman of the Board of Directors of Ernst & Young Switzerland.
“Our numerous initiatives in the SME sector play their part here. We were able to hold on to almost all of our existing engagements in the reporting year, and also acquired a number of new ones. We achieved these successful results despite major price pressure and an increase in regulatory requirements.”
Advisory services in demand
On the other hand, fee income of CHF 155.0 million (-2.6 percent) was earned in Tax and Legal Services.
“Thanks to our international network, we can defend our position as competition becomes fiercer, with more and more law firms entering the market,” said Dominik Bürgy, Leader Tax and Legal Services in Switzerland.
In Switzerland alone, Ernst & Young has about 500 employees to assist its clients.
The global Ernst & Young network comprises over 29,000 tax professionals and, in the person of Stephan Kuhn, Switzerland is home to the Tax Leader for the EMEIA Area, which includes Europe, the Middle East, India and Africa, according to Bürgy.
Advisory Services and Transaction Advisory Services saw fee income soar by 17.5 percent to CHF 87.5 million. As an integrated unit, the internationally-oriented Financial Services Organization (FSO) played a major part in this strong growth.
“One of the key reasons for this development is the increase in regulatory requirements, especially in the cross-border banking business, not to mention new statutory regulations for insurance companies. Thanks to our highly specialized advisors, we are able to offer sustainable solutions to our clients,” Bruno Chiomento noted.
EU regulatory proposals not conducive to the aims
On the EU’s new proposals on audit regulation, the accounting firm casts a skeptical view.
“All over the world, we actively endeavor to enhance the importance and quality of financial statement auditing. However, some of the EU’s proposals – such as mandatory rotation of companies for audit engagements or a total ban on advisory business for audit firms – do not promote this objective. Such moves do nothing to increase the quality or independence of auditing work,” Thomas Stenz said.
Education is the basis for success
Ernst & Young invests about 10 percent of its fee income in education and training for its employees each year. Commitments to various universities and colleges are a key factor in these initiatives.
Since August 2011, Ernst & Young has supported the newly-founded Chair in Family Business at the University of St. Gallen, which engages in research as well as teaching and practical knowledge transfer.
“Education is the foundation for successful development, in society as a whole and in the business world. Our resources and our vast practical experience give us the ability to continue advancing this process,” Bruno Chiomento said.