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Ernst & Young Overview
Ernst & Young provides advisory, audit and tax services. In 2009, Ernst & Young’s revenues were US$21.4 billion with 144,000 staff in 140 countries. Ernst & Young 2009 revenues: Audit $10.1 billion, Tax $5.8 billion and Advisory $5.5 billion. In 1903, Ernst & Ernst was formed. In 1979, Ernst & Whinney was formed. In 1989, Ernst & Young was formed. In 2000, E&Y Consulting was sold to Cap Gemini. Jim Turley is Global Chairman and CEO of Ernst & Young.
Ernst & Young 2011 Performance
Ernst & Young’s international 2011 revenues for the year ending 30 June 2011 were US$22.880 billion. That represented an increase of 5.3% in local currency terms from the comparable period in FY 2010 of US$21.255 billion in worldwide revenues. In American dollars, the revenue rose 7.6% from 2010 to 2011. Ernst & Young had excellent growth in all four geographic arenas, revenue jumped in all service lines, historically high headcount and high-profile audit clients that were new. Ernst & Young said that growth was largely organic with acquisitions adding only 0.5% to annual growth rates.
Ernst & Young placed third behind PwC. Deloitte had $22.880 billion, and KPMG held fast bringing up the rear of the Big Four firms at $22.710 billion, just $170 million behind. The gap was narrowing against Ernst & Young. Of note again, KPMG had only 0.9% more growth in local currency terms than E&Y (6.2% for KPMG versus 5.3% for E&Y). Still, the foreign sources where this growth came from in terms of changes against the US dollar moved in KPMG’s favor in 2011. US currency growth for KPMG at 10.1% was 2.5% more than that for E&Y at 7.6%.
Assurance Services did well. The FY 2011 revenues here of $10.561 billion was up 2.3% in local currency terms, and 5.0% in US dollar terms from FY 2010 revenues of $10.061 billion. Global Tax Services with FY 2011 revenues of $6.011 billion was up 4.1% in local currency terms and also up 6.0% in US dollar terms from FY 2010 of $5.671 billion. Ernst & Young Advisory Services with FY 2011 revenues of $4.304 billion was up an astounding 15.3% in local currency terms, and even stronger 17.5% increase from $3.662 billion in FY 2010 in US dollar terms. Transaction Advisory Services with FY 2011 revenues of $2.004 billion had a 5.7% increase in local currency terms and revenues grew 7.7% in US dollar terms from $1.861 billion in 2010.
Geographically speaking, Ernst & Young in the Americas had FY 2011 revenues of $8.981 billion, which increased 6.1% in local currency terms, and 7.3% in US dollar terms from FY 2010 revenues of $8.373 billion. EMEIA with FY 2011 revenues of $10.075 billion was up 4.5% in local currency terms and also up 5.5% in US dollar terms from FY 2010 of $9.551 billion. Asia-Pacific with FY 2011 revenues of $2.532 billion was up 10.0% in local currency terms, but increased 18.4% from $2.138 billion in FY 2010 in US dollar terms. Japan had FY 2011 revenues of $1.292 billion, which was down 2.0% in local currency terms but up 8.3% in US dollar terms from FY 2010 of $1.193 billion.
Ernst & Young noted that Brazil saw organic revenue growth of 26%, while India grew 22%, Africa was up 19%, Chinese revenues zoomed 18% and CIS grew 16% from 2010 to 2011.
Ernst & Young Key Changes
Ernst & Young made key changes in reporting their revenues in 2009, electing to show combined, not consolidated numbers by eliminating intra-firm billings. Ernst & Young restated its 2008 revenues down from $24.5 billion as originally reported to $23.0 billion reported as restated in 2009. Following is the rationale for the change: “In line with our globalization efforts to harmonize policies across member firms, revenues for 2009 and 2008 related to member firm billings to other member firms have been eliminated from the financial information presented here. This financial information represents combined not consolidated revenues, and includes expenses billed to clients.”