The audit service line, the largest in all firms, accounts for almost 47% of total revenues but this proportion has been steadily dropping across the years. In 2004, Audit revenues were 52% of total revenues, but by 2010, this had dropped a full 5% to 47% of revenues. The drop in Audit and also in Tax revenue was offset by an increase in the Advisory business. Typically Audit is a steady business, as publicly traded clients renew auditor services each year with some increase in annual fees. Most companies prefer to maintain their auditors for a long time, providing stability to the auditors’ top line. The Audit service line did experience sharp growth in total revenues in 2005 to 2007, but this has slowed down sharply in the 2008-2010 years. Audit rebounded from 2010 to 2011, but this was overshadowed by even faster growth in Advisory.
From 2008 to 2009, revenue for the Audit service line for the combined firms shrank by 6% in US dollar terms, and from 2009 to 2010, Audit revenues dropped a further 0.1%. But from 2010 to 2011, combined Audit revenues grew a strong 5.7% from $44.9 billion in 2010 to $47.5 billion in 2011. Audit revenues performance was somewhat better than the Tax service line which fell 7% from 2009 to 2010 and 1.1% for 2010 to 2011, demonstrating Audit’s somewhat anti-recessionary nature. Audit fees came under pressure in 2009, but firms maintained their focus on client service and market share gains to mitigate any losses in revenue. And Audit revenues generally held flat from 2009 into 2010, though Deloitte and E&Y experienced declines which were somewhat offset by increases in KPMG and PwC. From 2010 to 2011, the Audit service line grew at all four firms, with PwC growing fastest at 6.5% and Deloitte growing slowest at 5.1%.