Even Top Accounting Firms See Revenue Growth Slow to 1.8% Increase...

'2023 Accounting Firms Business Report Analysis Results'
Total Revenue Last Year Recorded at 5.8 Trillion KRW
Average Audit Fee is 49 Million KRW

Last year, due to the economic downturn, accounting firms experienced a slowdown in revenue growth as consulting work decreased. While the external audit and tax sectors recorded significant increases, the demand for mergers and acquisitions (M&A) and consulting sharply declined due to the economic slowdown.

According to the "2023 Fiscal Year Accounting Firms Business Report Analysis" released by the Financial Supervisory Service on the 20th, the total revenue of all accounting firms was 5.8 trillion KRW, an increase of 1.8% compared to the previous period.

Although revenue growth slowed across all sectors including audit, tax, and consulting, consulting revenue decreased by 4.2% compared to the previous period. The decline in consulting revenue is attributed to market contraction caused by the economic slowdown. On the other hand, audit revenue increased by 4.7% due to an increase in the number of companies subject to external audits by accounting firms. The tax sector also grew by 5.7% due to increased services related to tax adjustments and appeals.

The total number of external audits was 34,643, up 6.7% from the previous period, while the average audit fee slightly decreased to 49 million KRW. Looking at the average audit fee per company subject to external audit, the Big 4 firms charged 193.2 million KRW, registered firms 74.8 million KRW, and general firms 15.6 million KRW, showing a significant difference.

The total number of accounting firms was 233, an increase of 13 from the previous period, and registered accountants affiliated with accounting firms accounted for 60.4% of the total. The number of accounting firms with 100 or more accountants increased by two to 22, indicating that the size of accounting firms, centered on registered firms, is gradually becoming larger.

The revenue of the four major domestic accounting firms?Samil, Samjong, Hanyoung, and Anjin (the "Big 4")?was 2.8711 trillion KRW, an increase of 49.3 billion KRW (1.7%) compared to the previous period. The revenue growth rate significantly slowed compared to the previous period's 11.4%. By firm, revenue was in the order of Samil (1.0231 trillion KRW), Samjong (852.5 billion KRW), Anjin (515 billion KRW), and Hanyoung (480.5 billion KRW).

The "Big 4" have experienced rapid growth due to the increase in companies subject to external audits following the implementation of the External Audit Act. However, recent concerns about the economic recession have led to a decrease in revenue from M&A and consulting services. Audit revenue increased by 10.6% (97.9 billion KRW) compared to the previous period, but consulting revenue decreased by 5.9% (80.8 billion KRW).

Samil was the only one among the Big 4 to see an increase in consulting revenue, with its revenue rising by 5.2%, surpassing 1 trillion KRW. Hanyoung's consulting revenue decreased by 18.4%, resulting in a 4.8% decline in total revenue compared to the previous period. Hanyoung was the only firm among the Big 4 to experience a revenue decrease.

Operating profit also fell by 20.4% from 161.6 billion KRW to 128.7 billion KRW. The operating profit margin dropped from 2.8% to 2.2% during the same period. There were 144 directors who received fees of 50 million KRW or more, with an average fee of 820 million KRW. Samil disclosed the largest number of directors, with 65 individuals.

The Financial Supervisory Service stated, "Care must be taken to ensure that the slowdown in revenue growth does not lead to a decline in audit quality," and added, "Audit quality management should also be strengthened in response to the increasing size of firms."