Accounting Market Pulse May 2016

CommBank
Accounting
Market Pulse.
Conducted by Beaton Research + Consulting
May 2016 (Wave 2 FY16)
COMMBANK ACCOUNTING MARKET PULSE MAY 2016
Contents
Foreword
Economic outlook
Snapshot of survey findings
Business conditions
Perceived performance of the Australian
economy 7
Perceived performance of the Australian
economy by segment
Perception of business conditions
present to 2017
by area present to 2017
Perception of business conditions by area
and firm type
7
8
8
9
Top 3 business challenges

Negotiating price with clients
11
16
Realised rates
Expected changes in realised rates over the
next 6 and 12 months
18
Expense and profitability predictions

Changes in expenses over the next 6 months
19
Changes in expenses by segment over the

next 6 months
19
Changes in staffing by segment over

the next 6 months
20
Expected changes in core workforce turnover

in FY2016
21
Changes in average remuneration in FY2016
22
Change in operating margins for

the next 6 months
22
Keeping quality staff 12
Outsourcing
Finding quality staff 13
Frequency of outsourcing to lower cost

providers
23
Business priorities
Outsourcing work over the next 12 months
23
Market entry planning and growth
14
Revenue predictions
Changes in revenue by service line and firm

type over the next 6 months
Changes in revenue by location over the next 6

months
15
Changes in revenue by service line over the

next 6 months
15
Diversification push underway

management, and financial planning. The jump in
tax consulting, from fifth place in our last survey to
its current ranking of equal second, may reflect the
approach of the financial year-end while all three
levels of government are increasingly attractive given
their stability. Governments still seek assistance with
commercialising their services.
Marc Totaro
National Manager, Professional Services
Commonwealth Bank
It is my pleasure to present the second-half edition of
the CommBank Accounting Market Pulse for FY16,
conducted in partnership with Beaton Research +
Consulting.
What stands out is how effectively accounting firms
are responding to their business environment. The
survey, which captures a cross-section of the top
100 accounting and restructuring firms, highlights
the array of strategies they are implementing to add
value to their clients and grow their own firms.
Diversification is a common tactic, with a sizeable
percentage intending to enter and grow in new
service lines over the next 12 to 18 months.
Management consulting services is the preferred
area of expansion for many large and mid-sized
accounting firms, as well as restructuring firms. The
latter two groups also see increased opportunities
in business advisory and property advisory services.
Other firms plan on entering wealth management
and financial planning.
This diversification push means the chase for
acquisitions continues. Firms are after strategic
bolt-on assets to gain capability in niche areas like
human resources, taxation law and water asset
management advisory.
More immediately, the greatest short-term growth
in revenue is expected to come from economic
and social policy advice, tax consulting and wealth
Lifting productivity is another lever being pulled. The

three largest areas of expense growth over the next
six months remain staff training and development,
investing in IT hardware and software, and a focus
on marketing and business development.
The productivity push and expansion into new
service lines partly explain why firms, with the
exception of the very largest, forecast increased
operating margins in coming months.
Another survey finding is that firms are hiring more
equity partners, junior to mid-level accountants,
directors, managers and fixed share and salary
partners. In contrast, the head count of secretarial,
administrative and shared service staff is still falling, a
trend we expect to continue. The ratio of fee earners
to non-fee earners is climbing.
These strategies to lift revenue are complemented
by an increased propensity to outsource activities
to lower cost providers. Large firms, with exposure
to global trends, lead the way with 80 per cent
frequently outsourcing work. Smaller firms are
watching and waiting, with 74 per cent rarely or
never outsourcing. Nevertheless, the accounting
profession is years ahead of other professional
services providers in riding the outsourcing and
offshoring wave to improve profitability.
CommBanks Accounting Market Pulse presents
the professions latest views and trends, making it a
useful tool for business planning and benchmarking.
We look forward to continuing to monitor key
financial and operational performance indicators
within the industry and sharing these insights with
you.
Email: marc.totaro@cba.com.au
Tel : +61 2 9303 1940
Economic outlook
for the jobs market across a number of sectors in
those states. The lower Australian dollar is lifting
the currency exposed sectors of the economy.
Low interest rates look set to stay in place over the
coming year. Inflation remains low and there is little
sign of change in the trend towards quite weak
national wages growth.
Michael Workman
Senior Economist
Commonwealth Bank
The Australian economy continues to work its

way through a transition away from mining-driven
growth towards stronger outcomes from residential
construction and the services areas of tourism,
accommodation, health and education. The varying
outcomes across the business sectors and the
employment market reflect these shifts.
In our view, the domestic economy has
strengthened in the past six months, with overall
real growth finishing the year at 3 per cent, in
line with the longer term average. A significant
proportion of that growth came from higher goods
and services export volumes. But there were
also solid contributions from stronger household
spending trends, particularly in the services areas
like health, education and tourism.
The CommBank Accounting Market Pulse indicates
that accounting firms are slightly less optimistic
about future business conditions in the current
survey than the previous one. They are also less
positive on the 12-month and two-year outlooks for
their firms.
The national employment market has expanded
reasonably firmly over the past year and the
unemployment rate is near 5.8 per cent, which is
well below the rates of early 2015. Jobs growth
has mainly been in the larger states of New South
Wales, Victoria and Queensland over the past
year. The combination of very low mortgage rates
and a residential construction boom is beneficial
3
In our view, the background conditions for the

economy are likely to remain quite mixed through
the coming year. The lack of a consistent theme
of uniform improvement in overall growth tends to
promote a greater degree of caution than otherwise
would be the case. Even though interest rates
remain low by historical standards, there is still
considerable caution on the part of businesses and
households in terms of investment and spending
decisions.
The higher levels of business caution are likely
to mean the emphasis on various measures to
control costs, and even reduce them, will remain
paramount. Relatively low national wages growth
reflects the trend to both limit staff cost growth and
lift productivity. The other challenges in the firms
surveyed include collecting invoices, negotiating
prices charged to clients and recruiting and holding
quality staff. These issues are not just a local
phenomenon. They are regularly covered in global
business magazines. When growth in the market
slows, there needs to be a much more concerted
control over expenses to maintain a profitable
business.
Overseas influences on the local economy
will remain important over the rest of the year.
Australias major trading partner, China, is also
progressing through a transition towards more
consumer spending driven growth. The change
will present Australian businesses with new
opportunities because part of it involves much
higher numbers of Chinese tourists coming to
Australia. They will also be interested in investment
possibilities in parts of the local economy, like
tourism, accommodation and all forms of property.
So while there be some doubts about the future of
Australias mineral exports to Australia, there are
significant growth opportunities for other sectors if
Chinas transition succeeds.
The Australian dollar can be seen as barometer of how

Chinas economy is performing. The Australian dollars
recent shift to higher levels reflects not only a weak US
dollar, but also a clear pick-up in global commodity
prices like iron ore and oil. That is principally because
the news on Chinas economic outlook has become
more optimistic but it also reflects reduced oversupply
concerns. For exporters, the higher Australian dollar

is not such good news. But we do not see it returning
to the very high levels of a few years ago. We believe
the dining and tourism booms can proceed as Chinas
demand grows and the Australian dollar stays near
current levels.
Real GDP (annual % change)

%
6
Net %
0
Early
'90s
recession
-2
Sep-89
Sep-95
Sep-01
Sep-07
Sep-13
Trend
Labour Market Trends

40
6.5
5.9
30
5.3
20
4.7
10
4.1
3.5
Jul-05
Employment growth ('000)
Unemployment rate
Unemployment
rate, (lhs)
-10
Jul-07
Jul-09
Jul-11
Jul-13
Jul-15
Trend
Snapshot of survey findings

25%
23%
36%
20%
56%
40%
W1 FY16
W2 FY16
W1 FY16
W2 FY16
W1 FY16
W2 FY16
At the moment
In 12 months
In 2 years
Net % (positive - negative)
Perceived performance of
Australian economy
Geographic areas with highest

revenue growth expectations
Net % (increasing-decreasing)
-20% Large firms

25%
Mid-sized firms
50%
Restructuring firms
-21%
Other firms
Top 3 business challenges

for accounting firms
Negotiating
price with
clients
40%
Collecting
invoices
Net % (challenging - easy)

5
80%
New South Wales
75%
Victoria
68%
Main service lines to enter and grow

in the next 12 to 18 months
40%
Northern Territory
37%
Finding
quality staff
Large
firms
Management consulting
services
Mid-sized
firms
Management consulting services

Business advisory services
Property advisory
50%
Restructuring
firms

Property advisory
Corporate finance
Economic and social policy
50%
Other firms
Wealth management &

financial planning
47%
100%
% of respondents
Outsourcing of work over the

next 12 months
60%
50%
Large
firms
Restructuring
firms
Operating margins forecast
100%
65%
Mid-sized
firms
Other
firms
-20%
50%
50%
42%
Mid-sized
firms
Restructuring
firms
Other
firms
Large
firms
% who think it will increase
The majority of Accounting firms forecast an increase in outsourcing work

over the next 12 months.
Top 3 areas of increased revenue
over the next 6 months
100%
Economic and
social policy
advice
83%
Tax
consulting
82%
Wealth management
and financial
planning
Staff numbers
Top 3 areas of increased expenses

over the next 6 months
43%
Staff training and

development
40%
IT hardware and
software
40%
Marketing
and business
development
Outsourcing to lower cost providers
Equity partners
Junior to mid-level accountants
Directors / Managers
Fixed share / salary partners
80%
of Large firms
frequently outsource
work to lower cost
providers
Shared service staff

Secretarial and
administration staff
26%
of Other firms have

never outsourced
work to lower cost
providers
Business conditions
Perceived performance of the Australian economy
Perceptions of the Australian economy remain slightly negative among Australian accounting firms.
100
Net % (positive-negative)
80
60
40
20
0
17
17
58
57
-25 -8
-20
-9 -26
-40
Wave 1 FY16
-60
Wave 2 FY16
-80
Positive
-100
Neutral
Negative
Net
Perceived performance of the Australian economy by segment

Leaders of Large, Mid-sized and Restructuring firms are all less optimistic about the economy compared to
previous wave.
100
80
20
50
60
40
Net %
20
29
80
20
100
53
42
0
-33
-19
50
50
80
50
25
25
-29
-20
14
-20
-20
11
57
-32
-21
-25
-40
-60
-80
-100
Large firms
Mid-sized firms
Restructuring
firms
Other firms
Large firms
Mid-sized firms
Wave 1 FY16
Positive
Restructuring
firms
Wave 2 FY16
Neutral
Negative
Net
Other firms
Perception of business conditions for Australian accounting

firms present to 2017
Accounting firm leaders are more optimistic about current business conditions compared to six months ago,
and they remain confident across the long-term.
100
90
80
70
56
60
50
40
36
40
25
23
Wave 1 FY16
Wave 2 FY16
30
20
20
10
0
Wave 1 FY16
At the moment
Wave 2 FY16
Wave 1 FY16
Likely to be in 12 months time
Wave 2 FY16
Likely to be in 2 years time
Perception of business conditions by area

Price negotiation, collecting invoices and finding quality staff are considered the primary challenges in the
current market conditions.
60
Net % (easy-challenging)
50
40
30
20
47
39
20
13
10
11
8
0
0
-10
-13
-20
-22
-30
-40
-27
-31
-27
-31
-25
-37
-50
Accessing
capital
Keeping staff Competing with

fully utilised
other firms
Keeping
expenses
under control
Winning new Keeping quality Finding quality

business
staff
staff
Wave 1 FY16
-33
-40
Collecting
invoices
-40
Negotiating
price with
clients
Wave 2 FY16
Perception of business conditions by area and firm type

Large firms are finding it most challenging to win new business, negotiate price with clients and compete with
other firms.
100
86
80
60
40
62
57
40
38
26
20
20
50
29
16
14
0
-20
-20
-40
-33
-33
-60
-50
11
-40
-60
-80
-100
-120
Wave 1 FY16
Wave 2 FY16
Wave 1 FY16
Accessing capital
Large firms
100
Wave 2 FY16
Wave 1 FY16
Keeping staff fully utilised
Mid-sized firms
Wave 2 FY16
Competing with other firms
Restructuring firms
Other firms
86
80
60
40
20
0
-20
-40
-60
-20
-5
-16
-11
-25
-40
-20
-25
-29
-16
-50
-67
-80
-80
-100
-80
-80
-100
-120
Wave 1 FY16
Wave 2 FY16
Wave 1 FY16
Keeping expenses under control
Large firms
Wave 2 FY16
Winning new business
Mid-sized firms
Restructuring firms
Wave 1 FY16
Wave 2 FY16
Keeping quality staff
Other firms
100
80
60
40
20
0
-20
-40
-60
-80
-20
-29
-57
-32
-60
-50
-20
-43
-33 -29
-19
-25
-40
-47
-100
Wave 2 FY16
Wave 1 FY16
Finding quality staff
Large firms
Wave 2 FY16
Collecting invoices
Mid-sized firms
Restructuring firms
-26
-50
-100
-120
Wave 1 FY16
-25
-100
Wave 1 FY16
-100
Wave 2 FY16
Negotiating price with clients
Other firms
10
What firms are doing to address the

main challenges
Negotiating price
with clients
Focus on advisory versus compliance,

with differentiated service offerings.
Value based pricing options.
Fixed fee arrangements with client with

out of scope work done by an hourly
rate.
Partner, Large firm
CEO/Managing Partner, Other firm
Emphasising value over price; focusing

on needs not cost; offering flexibility
- phases of work, multiple decision
points, high or low spec options where
feasible.
Being upfront but identifying as soon as

possible where problems/overruns are
being met; guaranteeing fee level.
CEO/Managing Partner, Restructuring firm
Increasingly fixing fees for repetitive

work specials by negotiation with
frequent communication on progress.
High level of communication and
transparency around fees.
Discussing value and focus on getting

scope right.
Partner, Restructuring firm
Significant increase in training for

partners and directors re pricing
discussions, and consultative
conversations.
CEO/Managing Partner, Large firm
11
Keeping quality
staff
Improving engagement; connecting

them to our purpose and strategy,
increasing training opportunities.
Introducing a training continuum to

raise train and sustain key staff.
CEO/Managing Partner, Mid-sized firm
Chief Operating Officer / General Manager, Large

firm
Continue winning interesting,

challenging projects. Not tolerating
under-performance. Maintaining
benefits.
We keep quality people as we offer a

great and engaging workplace, above
market pay and great conditions. Many
social functions and activity, lots of staff
training, get the culture right and keep it
right.
CEO/Managing Partner, Restructuring firm
Looking at the different levels of

engagement with these people.
Conducting career interviews to see
that they are in line with the direction of
the firm. Greater open communication.
Flexibility in working hours. Providing HR
support through consultants.
Targeted talent development, wellness

and work-life balance programs. Focus
on diversity and gender equality.
Partner, Large firm
12
Finding quality
staff
Using recognized third parties to

manage organic growth and target
specialists and push our value
proposition to bring in experienced
staff.
Expanding recruitment beyond being a

function of HR.
CEO/Managing Partner, Mid-sized firm
Focus on graduate recruitment,

presenting firm culture and flexible
working conditions. Also focus on brand
and international affiliations.
Using sign on bonuses. Also employing

earlier whilst they are undertaking their
degrees to ensure we dont loose out to
competitors.
CFO, Other firm
Continuing focus on internal referrals.
Attending university open days,

attending career nights with accounting
bodies, becoming an employer of
choice.
CEO/Managing Partner, Large firm
13
Partner, Restructuring firm
Business priorities
Market entry planning and growth
Management consulting, wealth management and business advisory are the primary areas of market growth
over the next 12 to 18 months.
100
90
80
70
56
60
50
47
43
44
44
39
37
40
30
30
27
20
20
10
13
17
13
14
13
Management
consulting
services
Wealth
Business
management & advisory services
financial planning
Tax consulting
Wave 1 FY16
Superannuation
Business
recovery &
insolvency
External /
statutory audit
Property advisory
Wave 2 FY16
100
90
80
70
60
50
40
30
20
17
13
10
19
17
10
10
17
10
Risk
management
Corporate finance
(including M&A)
Economic &
social policy
advice
Tax compliance
Wave 1 FY16
Forensic & fraud

accounting
7
Internal audit
Private equity
Sustainability /
climate change
Wave 2 FY16
14
Revenue predictions
Changes in revenue by location over the next 6 months
Firms net forecast for total revenue in New South Wales, Victoria and Northern Territory have increased, while
forecasts in other states and regions have dropped or remained flat.
90
80
80
70
67
75
68
68
60
56
60
53
50 50
50
50
47
42
38
40
33
30
21
20
20
10
0
Northern
Territory
New South
Wales
Victoria
New Zealand
Queensland
Wave 1 FY16
Australian
Capital
Territory
Tasmania
South Australia
Western
Australia
Wave 2 FY16
Changes in revenue by service line over the next 6 months

Economic & social policy advice, tax consulting and wealth management & financial planning service lines are
expected to have the greatest increase in revenue.
100
100 100
90
90
83
80
82
83
82
75
74
74
74
70
61
60
50
57
56
44
44
40
30
20
10
0
Economic &
social policy
advice
Tax consulting
Wealth
Superannuation
management &
financial planning
Wave 1 FY16
15
Management
consulting
services
Wave 2 FY16
Business
Property advisory
Corporate
advisory services
finance (including
M&A)
100
80
71
60
55
50
40
40
52
50
50
39
38
27
25
25
17
20
-20
-27
-40
Forensic & fraud Tax compliance

accounting
External /
statutory audit
Risk
management
Wave 1 FY16
Internal audit
Private equity
Sustainability /
climate change
Business
recovery &
insolvency
Wave 2 FY16
Changes in revenue by service line and firm type over the next 6 months
Other firm leaders forecast a net decrease in revenue in corporate finance in this wave, while leaders in large
firms and mid-sized firm forecast a net decrease in business recovery & insolvency
100
100
100
100
100
100
100
71
80
80
75
67
100
100
60
100
100
94
79
75
87
71
50
50
40
20
20
0
-20
-40
-60
-80
-100
Wave 1 FY16
Wave 2 FY16
Wave 1 FY16
Economic and social policy advice
Large firms
Wave 2 FY16
Tax consulting
Mid-sized firms
Wave 1 FY16
Wave 2 FY16
Wave 1 FY16
Wealth management & financial

planning
Restructuring firms
Wave 2 FY16
Superannuation
Other firms
16
100
80
89
80
57
60
100
100
100
100
100
86
67
80
60
57
50
50
100
61
50
40
80 75
67 67
60
50
50
33
25
20
0 0
0
-20
-20
-40
-50
-60
-80
-100
Wave 1 FY16
Wave 2 FY16
Wave 1 FY16
Wave 2 FY16
Wave 1 FY16
Large firms
Wave 2 FY16
Property advisory
Mid-sized firms
Wave 1 FY16
Wave 2 FY16
Corporate finance (including M&A)
Restructuring firms
Other firms
100
80
80
67
60
60
50
60
50
43
33
40
58
40
60
50
67
42
35
14
0
67
33
20
0
75
67
60
20
20
0 0
-20
-40
-60
-80
-100
Wave 1 FY16
Wave 2 FY16
Wave 1 FY16
Forensic & fraud accounting
Wave 2 FY16
Wave 1 FY16
Tax compliance
Large firms
Wave 2 FY16
Wave 1 FY16
External / statutory audit
Mid-sized firms
Restructuring firms
Wave 2 FY16
Risk management
Other firms
100
80
67
75
67
67
67
50 50
60
33
40
20
0
40
33
20
0 0
0 0
0 0 0
0 0 0
0 0 0 0
-20
0
-20-17
-40
-20
-60
-67
-80
-67
-100
Wave 1 FY16
Wave 2 FY16
Internal audit
Large firms
17
Wave 1 FY16
Wave 2 FY16
Private equity
Mid-sized firms
Wave 1 FY16
Wave 2 FY16
Sustainability / climate change
Restructuring firms
Wave 1 FY16
Wave 2 FY16
Business recovery & insolvency
Other firms
Realised rates
Expected changes in realised rates over the next 6 and 12 months
Compared to the last report, Restructuring firms now have a more optimistic view on realised rates.
6.0
4.4
4.0
3.8
3.4
3.6
Mean %
2.5
2.0
1.5
1.5
1.5
0.0
0.0
-2.0
2.5
2.5
2.8
1.3
0.5
0.0
-1.3
-4.0
Wave 1 FY16
Wave 2 FY16
In the next 6 months (as compared to the last 6 months)
Large firms
Mid-sized firms
Wave 1 FY16
Wave 2 FY16
In the next 12 months (as compared to the last 6 months)
Restructuring firms
Other firms
18
Expense and profitability predictions

Changes in expenses over the next 6 months
Accounting firm leaders continue to prioritise staff training and development, IT hardware and software and
marketing and business development.
80
70
60
54
51
50
51
43
40
40
41
40
33
30
23
20
20
13
11
10
0
-10
-20
Staff training &

development
IT hardware &
software
Marketing &
business
development
Knowledge
management
Wave 1 FY16
Professional
indemnity insurance
Occupancy
Telecommunications
Wave 2 FY16
Changes in expenses by segment over the next 6 months

The main focus for Large firms for the next 6 months is on IT hardware and software and staff training and
development, while for mid-sized firms, the main focus is on knowledge management.
100
100
80
60
80
80
65
43
60
65
60
50 50
50
37
40
33
14
20
25
32
50
43
47
50
45
26
20
0
71
60
60
-20
-40
-33
-60
-80
-100
Wave 1 FY16
Wave 2 FY16
Staff training & development

Large firms
19
Wave 1 FY16
Wave 2 FY16
IT hardware & software

Mid-sized firms
Wave 1 FY16
Wave 2 FY16
Wave 1 FY16
Marketing & business development

Restructuring firms
Other firms
Wave 2 FY16
Knowledge management
80
50
40
30
21
20
0
20
20
20
16
-20
40
15
11
-14
-25
-29
-33
-50
-70
-67
-120
Wave 1 FY16
Wave 2 FY16
Wave 1 FY16
Professional indemnity insurance
Wave 2 FY16
Wave 1 FY16
Occupancy
Large firms
Mid-sized firms
Wave 2 FY16
Telecommunications
Restructuring firms
Other firms
Changes in staffing by segment over the next 6 months

Large firms forecast the highest net increase in partner numbers.
100
100
100
75
80
20
67
60
50 50
60
40
75
29 33
21
20
26
17
0
50
33 33
13
20 25
37
-20
-40
-60
-80
-100
-120
Wave 1 FY16
Wave 2 FY16
Equity partner numbers
Large firms
Wave 1 FY16
Wave 2 FY16
Fixed share / salary partner numbers
Mid-sized firms
Restructuring firms
Wave 1 FY16
Wave 2 FY16
Director / manager numbers
Other firms
20
100
80
60
40
67
60
60
50 50
29
26
14
20
0
-20
-20
-40
-14
-20
-25
-33
14
-11
-14
-40
-50
-60
-50
-80
-100
-120
Wave 1 FY16
Wave 2 FY16
Wave 1 FY16
Junior to mid-level accountant numbers
Large firms
Wave 2 FY16
Wave 1 FY16
Shared service staff numbers

(e.g. Marketing, IT, Finance, HR)
Mid-sized firms
Wave 2 FY16
Secretarial & admin staff numbers
Restructuring firms
Other firms
Expected changes in core workforce turnover in FY2016

Turnover across all levels, except secretarial and administrative staff are expected to increase.
100
80
60
35
40
17
14
20
17
0
-20
35
25
10
-10
-10
-13
-40
-60
-80
-100
Equity partner
numbers
Fixed share /
salary partner
numbers
Director / manager
numbers
Wave 1 FY15
21
Junior to mid-level
accountant numbers
Wave 2 FY16
Shared service
staff numbers
Secretarial &
admin staff numbers
Changes in average remuneration in FY2016

Increase in remuneration is forecast to be highest for salary partners and directors
6.0
5.0
Mean %
4.0
3.4
3.0
2.8
2.5
2.8
2.5
2.0
2.0
1.8
1.4
1.3
1.0
1.0
0.0
Fixed share /
salary partner
numbers
Director / manager
numbers
Junior to mid-level
accountant numbers
Wave 1 FY15
Shared service
staff numbers
Secretarial &
admin staff numbers
Wave 2 FY16
Change in operating margins for the next 6 months

All firms, except Large firms, forecast operating margins to increase for the next 6 months.
100
80
60
40
57
50
40
50
33
42
20
0
-20
-20
-40
-60
-67
-80
-100
-120
Wave 1 FY16
Large firms
Wave 2 FY16
Mid-sized firms
Restructuring firms
Other firms
22
Outsourcing
Frequency of outsourcing to lower cost providers
The proportion of firms who outsource work frequently has increased among all firm types except
Restructuring firms.
100
90
20
33
80
29
70
60
10
5
14
20
21
50
28
40
34
50
40
100
60
24
43
11
30
20
50
40
10
37
33
33
26
20
14
0
Large firm
Mid-sized firm
Restructuring
firm
Other firm
Large firm
Mid-sized firm
Wave 1 FY16
Never
Restructuring
firm
Other firm
Wave 2 FY16
Almost never
Rarely
Somewhat frequently
Very frequently
Outsourcing work over the next 12 months

The majority of firm leaders in Large, Mid-sized and Other firms forecast an increase in outsourcing work over
the next 12 months.
100
90
20
20
80
50
41
57
70
59
40
60
50
67
50
40
80
30
29
53
20
33
10
50
40
50
35
14
0
Large firm
Mid-sized firm
Restructuring firm
Other firm
Large firm
Wave 1 FY16
Decrease significantly
23
Mid-sized firm
Restructuring firm
Wave 2 FY16
Decrease
About the same
Increase
Increase significantly
Other firm
Further
information
For further insights or
information, please contact:
For media inquiries,

please contact:
Marc Totaro, National Manager

Professional Services
Bethany Poore
Mobile: 0477 763 097
Phone: +61 2 9303 1259
Mobile: 0477 739 315

Phone: +61 2 9303 1940
Email: marc.totaro@cba.com.au
Web: commbank.com.au/accountingmarketpulse
About Beaton Research + Consulting

Beaton Research + Consulting is a full-service research firm which offers a full range of solutions for
professional services firms, financial services firms and associations. Their expertise includes benchmarking,
thought leadership, brand solutions, customised solutions and client satisfaction.
Things you should know: This report is published solely for information purposes. As this report has been prepared without considering your objectives, financial situation or needs,
you should before acting on the information in this report, consider its appropriateness to your circumstances and if necessary seek the appropriate professional advice. This biannual report
has been prepared independently by Beaton Research + Consulting and is commissioned by Commonwealth Bank. The confidential online survey used to prepare this report was undertaken
by Beaton Research + Consulting in February and March 2016. The report is based on the views of 30 accounting firms across Australia with a combined revenue of approximately $4.7B.
Any opinions, conclusions or recommendations are reasonably held or made, based on the information available at the time of its compilation. No representation or warranty, either expressed
or implied, is made or provided as to the accuracy, reliability or completeness of any statement made in this report. The project was undertaken in compliance with the requirements of ISO
20252. Commonwealth Bank of Australia ABN 48 123 123 124.
24

Accounting Market Pulse May 2016

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COMMBANK ACCOUNTING MARKET PULSE MAY 2016

Snapshot of survey findings

Top 3 business challenges

Expense and profitability predictions

Changes in expenses by segment over the

Changes in staffing by segment over

Expected changes in core workforce turnover

Changes in average remuneration in FY2016

Change in operating margins for

Keeping quality staff 12

Finding quality staff 13

Frequency of outsourcing to lower cost

Outsourcing work over the next 12 months

Market entry planning and growth

Changes in revenue by service line and firm

Changes in revenue by location over the next 6

Changes in revenue by service line over the

COMMBANK ACCOUNTING MARKET PULSE MAY 2016

Diversification push underway

Lifting productivity is another lever being pulled. The

COMMBANK ACCOUNTING MARKET PULSE MAY 2016

The Australian economy continues to work its

In our view, the background conditions for the

COMMBANK ACCOUNTING MARKET PULSE MAY 2016

The Australian dollar can be seen as barometer of how

concerns. For exporters, the higher Australian dollar

Real GDP (annual % change)

Labour Market Trends

Employment growth ('000)

COMMBANK ACCOUNTING MARKET PULSE MAY 2016

Snapshot of survey findings

Net % (positive - negative)

Geographic areas with highest

-20% Large firms

Top 3 business challenges

Net % (challenging - easy)

New South Wales

Main service lines to enter and grow

Net % (positive - negative)

Management consulting services

Management consulting services

Wealth management &

COMMBANK ACCOUNTING MARKET PULSE MAY 2016

Outsourcing of work over the

Operating margins forecast

% who think it will increase

The majority of Accounting firms forecast an increase in outsourcing work

Top 3 areas of increased expenses

Staff training and

Outsourcing to lower cost providers

Shared service staff

of Other firms have

COMMBANK ACCOUNTING MARKET PULSE MAY 2016

Perceived performance of the Australian economy by segment

COMMBANK ACCOUNTING MARKET PULSE MAY 2016

Perception of business conditions for Australian accounting

Net % (positive - negative)

Likely to be in 12 months time

Likely to be in 2 years time

Perception of business conditions by area

Keeping staff Competing with

Winning new Keeping quality Finding quality