EY-set-to-surpass-Deloitte-in-Korea
Seen is EY Han Young's head office in Seoul. Courtesy of EY Han Young

Deloitte keeps struggling

Korea’s accounting industry has not seen big changes in the rankings of the four biggest players over the past few years.

Samil PricewaterhouseCoopers has been the runaway leader, while Samjong KPMG and Deloitte Anjin have competed for the runner-up spot. And EY Han Young has been a distant No. 4.

But the business landscape is poised to change in an abrupt way as EY Han Young is rising as Deloitte Anjin is falling, according to the Korea Institute of Certified Public Accountants.

The institute’s data shows that Samil PricewaterhouseCoopers held 2,003 registered accountants as of the end of 2018 chased by Samjong KPMG with 1,560. EY Han Young came in third with 1,032 ahead of Deloitte Anjin’s 957.

Last year, the numbers of EY Han Young increased by 187 while that of Deloitte Anjin decreased by 64, allowing the former to surpass the latter for the first time.

In terms of annual sales, EY Han Young might also have nudged past Deloitte Anjin for the fiscal year 2018, which ends this March.

In 2017, Deloitte Anjin barely kept the No. 3 place and the gap with EY Han Young was a mere $24 million compared to more than $100 million in 2015 and $80 million in 2016.

Deloitte Anjin’s struggles are attributable to the financial regulator’s ban on new business, which is related to the window dressing suspicions over the once-embattled Daewoo Shipbuilding & Marine Engineering (DSME).

Deloitte Anjin came under fire over its alleged incompetent audit of DSME, which had been accused of cooking the books to make huge losses it incurred in the early 2010s look smaller.

In 2017, the country’s financial watchdog suspended Deloitte Anjin from opening new accounting services for a full year. This wreaked havoc on the Seoul-based accounting company.

Samil’s headache?

Big players are not entirely free from complicated issues. For one, PricewaterhouseCoopers hopes Samil will become its member company, not a network firm.

Samil is currently the only network firm of PricewaterhouseCoopers in the world.

Any network firm can leave PricewaterhouseCoopers without paying a big penalty. But a member company must pay three years of revenue to say goodbye to the London-based firm.

When contacted, Samil admitted that PricewaterhouseCoopers wants it to become a member company.

We will have to compare the benefits of being a member company with those of remaining as a network firm. But there have been no serious discussions between Samil and PricewaterhouseCoopers regarding this,” a Samil official said.