(Reuters) - Global audit firm Ernst & Young ERNY.UL said revenues for 2012 rose to $24.4 billion, but warned the coming months will be challenging because of the European sovereign debt crisis and the looming U.S. “fiscal cliff” at year-end.
Led by double-digit growth in consulting and advisory services, Ernst’s revenues for the fiscal year ended June 30 increased 6.7 percent from $22.9 billion in 2011.
Ernst & Young last year ranked as third-largest of the “Big Four” audit and consulting firms in revenues, behind PricewaterhouseCoopers PWC.UL and Deloitte Touche Tohmatsu LtdDLTE.UL and ahead of KPMG KPMG.UL.
Deloitte last month announced revenues of $31.3 billion, while the other two Big Four firms have yet to report.
Emerging markets were a key revenue source for Ernst, though slowing growth will make the coming months more challenging, the firm said in a statement. Revenues in Brazil grew 17.5 percent, while India’s rose 19.8 percent and China’s grew 11.8 percent.
Revenues in the United Kingdom grew 11 percent, the most in six years.
Ernst’s global advisory and consulting services grew 16.2 percent, while audit and related services rose just 4.1 percent and tax revenues grew 7.0 percent.
Ernst increased its headcount by more than 15,000 to 167,000.
Overall results were the best since 2008, Ernst said. However, the firm said it is facing an uncertain business climate because of Europe’s debt crisis and the U.S. fiscal cliff - the year-end deadline when a wave of automatic tax increases will occur and deep federal spending cuts will begin unless Congress acts.
Ernst’s results cap more than a decade of growth under global Chief Executive Jim Turley, who retires in June 2013. Ernst’s revenues were $10 billion when Turley became CEO in 2001. He will be replaced by Mark Weinberger, a former U.S. Treasury official and lobbyist.
The Big Four’s combined revenues are expected to post a third straight year of gains after a recessionary downturn in 2009. The firms are cementing their grip on audits of the world’s biggest companies, despite concerns by some regulators that more competition is needed.
The Big Four are facing more regulatory scrutiny after they failed to flag risks at banks that had to be bailed out during the global financial crisis.
The European Union is mulling restrictions on consulting services firms can provide to companies they audit, while U.S. regulators are considering a requirement that companies switch audit firms more often.
Reporting by Dena Aubin; Editing by Kevin Drawbaugh, Bernard Orr