Auditors are benefiting from the crisis & are growing significantly

PwC Germany boss Petra Justenhoven:

The manager has been leading the audit firm since July 2022.

(Photo: PwC/ Frank Rumpenhorst, Thomas Berger (M))

Dusseldorf Although the economy is weakening, German auditing firms continue to earn well. Market leader PwC increased its sales by 14 percent to EUR 2.6 billion in the past 2021/22 financial year, as the company announced. In the new year that has been running since July, PwC is growing continuously and is “on the right track”, as the new Chief Operating Officer Stefan Frühauf announced.

This is mainly driven by the consulting divisions. Some industrial companies have announced that they intend to reduce their consulting budgets. But the service providers are not expecting a major setback.

According to Petra Justenhoven, Head of PwC Germany, some trends continue to increase the need for advice: “It is clear that our customers are sticking to the major transformation projects for digitization and decarbonization.” The third trend is the growing importance of cybersecurity.

Competitor Deloitte comes to a similar conclusion. According to its own statements, the number four in the market feels no signs of a crisis in consulting. Deloitte has recently grown even faster than the market leader PwC: In the fiscal year up to the end of May, sales increased by 24 percent to EUR 1.9 billion, with the consulting division alone growing by 46 percent.

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PwC now generates 1.1 billion euros in the advisory division – around 25 percent more than in the previous year. If you include tax and legal advice, all consulting services account for a turnover of almost 1.7 billion euros – ie a good 65 percent of the total turnover of the auditing company. At Deloitte it is now even 75 percent.

Divisions ensure turnover of the auditors

The traditional auditing business is also growing, albeit to a lesser extent. PwC increased sales by ten percent to EUR 841 million. The business is less driven by the classic balance sheet audit. PwC benefited above all from the numerous spin-offs of parts of German corporations and the associated business with changed financial reporting.

In the coming years, PwC will once again make significant gains in the final exam. In the course of the statutory rotation, the company has won numerous new mandates, most recently Mercedes-Benz, Siemens and Adidas. PwC will in future examine the balance sheets of 17 Dax companies.

PwC has recently emphasized several times that it intends to stick to the mixed model of consulting and auditing. Unlike its competitor EY, the group is not planning to split up into separate companies. According to PwC, the integration aims to bundle more competencies throughout the company and offer employees better career opportunities.

>> Read about this: Audit firm EY gives the go-ahead for split

The big issues in the economy bring new business to service providers both in consulting and in auditing. This can be seen in the example of sustainability: The auditors have to look at and certify the sustainability reports of their clients. The legal requirements are increasing. Other customers advise you strategically on this topic.

The same applies to cybercrime, where the expertise of the auditing companies is in demand both in the audit and in consulting. PwC wants to invest more in this business, as Germany boss Justenhoven said. As Continental’s auditor, PwC is currently also working on the hacker attack on the automotive supplier, according to industry circles.

The auditors can play their aces when it comes to cybercrime in particular: large parts of the economy are poorly prepared for the threat of attacks on their IT. There is a lack of internal experts in this area. PwC and Co. have therefore set up large cybersecurity units. They know the client’s systems well and look for weaknesses there on their behalf.

More: Deloitte grows by 24 percent – “No noticeable effects of the crisis in the consulting business”

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