Side Business More Profitable Than Main Job... Accounting Firms Surpass Management Consulting Revenue for the First Time

2021 Fiscal Year Accounting Firms Revenue 5 Trillion KRW
Management Consulting 36.3% VS Audit 32.5%
FSS "Thorough Independence Checks Required"

23,938 Registered CPAs... 57.4% Belong to Accounting Firms
Big 4 Accounting Firms Concentrate Junior CPAs with Less Than 5 Years Experience

[Asia Economy Reporter Ji Yeon-jin] Last year, domestic accounting firms earned more revenue from management consulting sales such as mergers and acquisitions (M&A) than from their core accounting audit services. This is the first time that management consulting sales have surpassed audit revenue.

On the 27th, the Financial Supervisory Service announced that the total revenue of domestic accounting firms for the 2021 fiscal year was 5.0972 trillion KRW, an increase of 16.8% (733.2 billion KRW) compared to the previous year. Management consulting sales accounted for 1.8494 trillion KRW, or 36.3%, followed by accounting audits at 1.6575 trillion KRW (32.5%), tax services at 1.3936 trillion KRW (27.3%), and others at 196.7 billion KRW (3.9%).

Management consulting sales increased by 28.8% (423.2 billion KRW) from the previous year due to rising demand for advisory services related to M&A, internal accounting control systems, and the introduction of new accounting standards (K-IFRS17). Notably, registered firms excluding the Big Four saw a sharp increase of 36.7%.

Management consulting revenue of accounting firms has been on the rise annually, from 1.3137 trillion KRW in 2019 to 1.4362 trillion KRW in 2020, and this time the proportion of management consulting sales exceeded that of accounting audit sales.

A Financial Supervisory Service official stated, "When accepting non-audit services for audit clients, it is necessary to thoroughly conduct risk assessments and independence checks to ensure that the risk of independence impairment does not occur."

Revenue from accounting audit services increased by 11.7% (173.7 billion KRW), and tax service revenue rose by 10.1% (127.4 billion KRW) due to increased services related to tax adjustments and appeals.

As of March this year, the number of accounting firms registered with the Financial Services Commission was 209, an increase of 14 from the previous year, and the number of registered accountants increased by 1,077 to 23,938. Among them, accountants affiliated with accounting firms accounted for 57.4% of the total, numbering 13,737, an increase of 733 (5.6%).

The largest group of registered accountants affiliated with accounting firms had over 15 years of experience, totaling 4,067 (29.6%), of which 2,674 (65.7%) belonged to registered firms.

Among accountants with over 15 years of experience, 753 were affiliated with the Big Four firms. In the Big Four, accountants with less than 5 years of experience accounted for more than half (57.2%). In accounting firms excluding the Big Four, accountants with less than 5 years of experience accounted for only 10.8%.

This content was produced with the assistance of AI translation services.