Financial Auditing Professional Services Market Size, Share & Trends Analysis Report By Type (External, Internal), By Service (Financial Statement, Employee Benefit Plan), By End Use, And Segment Forecasts, 2019 - 2025

Industry Insights

The global financial auditing professional services market size was valued at USD 109.21 billion in 2017. It is anticipated to progress at a CAGR of 7.4% from 2018 to 2025. Stringent regulations regarding disclosure and reporting of financial details are projected to provide an upthrust to the market over the forecast period. With new businesses getting established, new companies getting listed publicly, and conducting internal audits becoming a common practice among private companies as well as public companies, the market is poised to witness significant growth.

Enterprises, particularly large companies, are confronting growing volumes of data. Moreover, stringent regulations, such as a mandate for listed companies to appoint an external auditor to audit their books and publish financial figures at the end of a financial year, are adding to the complexity. As a result, financial audit professional service companies are opting for cloud-based infrastructure and focusing on integrating digital technologies, such as data analytics. These technologies can facilitate collection, analysis, and reporting of financial data. Digital technologies can also help auditors gain actionable insights into an enterprise’s financial figures.

The U.S. has well-established regulatory scenario. Moreover, companies based in the U.S. are proactively adopting internal auditing policies. Resultant increase in corporate spending on financial auditing and reporting is encouraging new auditing companies to consider making a foray into the market, which in turn, is intensifying the competition. In order to defend their current market share and expand their business operations in emerging economies, particularly in Asia Pacific and Latin America, key market players have started offering consulting services to their existing customers and are also acquiring smaller companies.

Auditing companies are offering integrated and elaborate audit reports by adding new performance indicators to conventional operating metrics related to production capacity, production volumes, and operating expenses, among others. Integrated reporting envisages combining financial and sustainability data with information about intangible wealth that is mostly unreported so that stakeholders can gain more comprehensive insights into company’s performance.

Comprehensive financial statement audit reports enable customers to address operational issues and identify opportunities that can enhance performance of the organization in long term. These reports also help businesses in making strategic decisions related to capital allocation, operational efficiency, and business expansion.

Auditing firms are continually focusing on improving their service delivery models in line with evolving business environment.  As such, they are combining incumbent delivery models, including shared services delivery model, offshore development center model, offsite delivery model, and onsite delivery model, to develop new service delivery models.

Type Insights

On the basis of audit type, the market has been further bifurcated into internal and external.  The external segment dominated the market in 2017 and accounted for just over  66.0% of the overall revenue. The internal segment is likely to post a higher CAGR over the forecast period as organizations focus on effectively managing risks related to frauds, protecting business interests, and enhancing business performance.

Meanwhile, an internal financial audit is gradually gaining importance. Primary function of an internal financial audit is not only to monitor and detect misreporting, but also to conduct a detailed investigation of fraudulent activities. Such internal analysis allows companies to accurately ascertain financial position and help management in making strategic decisions on business expansion and diversification. On the other hand, an external audit provides an independent, third-party assessment on whether or not the company is complying with regulations and adhering to generally accepted accounting principles (GAAP) while maintaining its books.

Service Insights

Based on service, the financial auditing professional services market has been segmented into due diligence, employee benefit plan, financial statement, service organization control (SOC), and others. The financial statement audit segment represented the leading share of more than 60.0% in 2017. It is expected to exhibit the highest CAGR over the forecast period due to stringent regulations governing financial auditing and reporting by enterprises.

Apart from ensuring compliance with regulations and standards, continuous financial audits also enable top management to track risk controls, accounting practices, information technology (IT) systems, compliance, and business procedures of a company on real-time basis and aid in strategic decision-making. Continuous audits are usually technology-driven and are designed to automate real-time error detection and data verification. Financial audit functions also help companies in managing risks and preventing misreporting, thereby reducing vulnerability to fraud.

End-Use Insights

On the basis of end-use, the market has been divided into BFSI, government, manufacturing, healthcare, retail & consumer, IT & telecommunication, and others. The BFSI segment commanded approximately 21.0% of the overall revenue in 2017. The segment is estimated to expand at the highest CAGR during the forecast period.

Growing digitization in the sector, stringent regulatory scenario, and proactive internal auditing practices being adopted by banks, financial institutions, and insurance companies are supporting the dominance of the segment. The healthcare sector is also anticipated to witness an upswing in the adoption of financial audit services in line with the continued rollout of healthcare facilities in semi-urban and rural areas of developing economies.

Regional Insights

North America will remain at the forefront of the global arena in terms of value throughout the forecast horizon. Stable regulatory scenario, presence of several multinational corporations (MNCs), and voluntary adoption of efficient internal auditing and reporting practices by companies based in the region are contributing to the growth of the market.

Markets in North America and Europe are relatively mature. Organizations in these regions remain keen on complying with stringent regulations and also happen to be early adopters of emerging best practices and technologies.

Asia Pacific is projected to emerge as the fastest-growing regional market during the forecast period. While MNCs are expanding aggressively in Asia Pacific in order to capitalize on rapid industrialization and flourishing consumer market, any such expansion in new geographic markets is exposing these companies to newer risks and regulatory scenario is evolving accordingly.

Over the last decade, several MNCs have established subsidiaries in emerging economies, such as China and India, to cater to spiraling regional demand. In addition, levels of foreign direct investment (FDI) have also increased substantially, as a result of which, companies are focusing on complying with various regulations.

Financial Auditing Professional Services Market Share Insights

Key industry players operating in the market include PricewaterhouseCoopers (PwC), Deloitte Touche Tohmatsu Limited, KPMG International, Grant Thornton International Ltd., Ernst & Young (EY), Binder Dijker Otte (BDO) Global, Mazars, Nexia International Limited, RSM International Association, and Moore Stephens International Limited. All these companies are focusing on developing shared service delivery models in order to improve their business performance and expand their clientele.

Shared service delivery models are potentially allowing financial audit service firms to collaborate with companies specializing in digital technologies, such as big data, analytics, machine learning, mobile computing, and business intelligence. Data analytics services are poised to emerge as new sources for revenue generation that can complement core business of auditing companies.

In 2016, KPMG International partnered with IBM Corporation to integrate latter’s Watson cognitive computing technology with its professional services offerings. In 2017, KPMG International collaborated with Microsoft Corporation to introduce KPMG Clara, a new smart audit platform and an automated, intelligent, agile, and scalable solution capable of providing data and analytic capabilities in a single interface. In 2018, PricewaterhouseCoopers (PwC) Hungary Ltd. acquired Data Solutions Kft. to focus on development of new data-based products and solutions and integrating them with existing portfolio.

Report Scope

Segments Covered in the Report

This report forecasts revenue growth at global, regional, and country levels and provides an analysis of the latest industry trends in each of the sub-segments from 2014 to 2025. For the purpose of this study, Grand View Research has segmented the global financial auditing professional services market report based on type, service, end-use, and region:

• Type Outlook (Revenue, USD Billion, 2014 - 2025)

  • External Audit

  • Internal Audit

• Service Outlook (Revenue, USD Billion, 2014 - 2025)

  • Employee Benefit Plan Audit

  • Service Organization Control (SOC) Audit

  • Financial Statement Audit

  • Due Diligence

  • Others

• End-Use Outlook (Revenue, USD Billion, 2014 - 2025)

  • BFSI

  • Government

  • Manufacturing

  • Healthcare

  • Retail & Consumer

  • IT & Telecom

  • Others

• Regional Outlook (Revenue, USD Billion, 2014 - 2025)

  • North America

    • The U.S.

    • Canada

  • Europe

    • The U.K.

    • Germany

  • Asia Pacific

    • China

    • India

    • Japan

  • Latin America

    • Brazil

  • Middle East & Africa