EY Global review 2013 - Q&A with Mark Weinberger

Global review 2013

Q&A with Mark

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  • What is the state of the global economy? What long-term trends are you seeing?

    In the near term, we are definitely seeing signs of improvement in the global economy. The eurozone has emerged from recession, although the picture there is still mixed. China’s slowdown in growth rate looks to be moderating and US economic data continue to show a strengthening recovery. While expectations for global economic growth, corporate earnings and credit availability are improving, many companies are still cautiously weighing macroeconomic and geopolitical risks around the globe.

    Over the longer term, globalization, demographic shifts and technology will continue to drive economic growth. Despite the recent slowdown in emerging markets and the improved outlook in developed ones, many emerging markets have younger populations and more favorable dependency ratios. These trends will contribute to the global economic rebalancing that we’ve seen for the past generation.

    In the wake of the financial crisis, and as economies become more connected, regulation further complicates the picture. International regulatory cooperation is becoming increasingly important, yet it can be a slow and painstaking process to achieve.

    One of the most pressing issues, in both the short and long term, is the sharp rise in youth unemployment that we’ve seen in many countries. This is something that business, governments and international organizations must work together to address. We risk losing a generation in terms of its long-term economic potential. Further, societies that cannot give their young people a stake risk instability and upheaval. Governments should address tight controls over labor markets and ensure that young people receive the education and training they need to secure meaningful, productive jobs.

  • How are EY’s clients dealing with that uncertain business landscape?

    We work with businesses large and small across a wide range of industries and what we are seeing is that there are no universal answers. The immediate result of the uncertainty in the geopolitical and macroeconomic environment is that many businesses are acting cautiously. This is holding back economic recovery with businesses slow to make investments and hire new people.

    The best businesses are taking a long-term view and recognize that to stay ahead of their competition they must be responsive to evolving market conditions. They must continually innovate so they can respond to change quickly and effectively. This is where technology can play a big role, opening up a wealth of new data that can be used to feed into future strategic planning and execution.

  • We are continuing to see many countries scrutinizing how corporations handle their tax obligations. Where do things stand currently and what can we expect to see in the future?

    Policy makers and the media around the world are drawing attention to the amount of tax paid by multinational companies and the role of their tax advisers, including those in the accounting profession.

    The role of our Tax practice is to help our clients meet the incredibly complex tax obligations they face.

    The heart of the issue is that international tax rules have not kept pace with changes in the global business environment. Changing these rules to reflect the level of globalization that we now have will require the commitment of governments around the world.

    Countries need to look at both their laws and the international treaties to which they are signatories and ensure that the tax rules and the incentives provided are sensible when applied to today's business models.

    Finding the right solution will take a coordinated approach. The business community and tax administrations must find ways to collaborate better and, at the same time, tax administrations around the world must work together more closely.

    We are committed to helping find solutions that will build a tax system that is appropriate for the global economy of today and tomorrow.

  • During the past few years, a number of jurisdictions have been focusing on various aspects of audit policy reform. What do you see as the results?

    Conversations are taking place among all stakeholders around the evolving role and on-going relevance of audits.

    The most important discussions are focused on the role of audit and its on-going relevance to investors today and into the future. Less helpful discussions are those focused on unproven actions that risk adverse consequences to audit quality, such as mandatory firm rotation and broad bans on non-audit services.

    What is clear is that corporate reporting is set to change substantially over the next few years. There is a growing desire for more insights about a company’s health and insights about the systemic health of a sector. This will result in changes to the auditor’s report, as will the continued emergence of integrated reporting.

    The environment remains highly fluid and we are seeing the effects in the market as well. For us, this is an opportunity to demonstrate the quality and relevance of what we do. Will this require some changes? Absolutely. But there is no question that the audit profession will continue to serve the public interest and play an important role in bringing confidence to the capital markets.

  • How did Vision 2020 come about? What changes will EY’s stakeholders see?

    Vision 2020 is our plan to make EY the leading global professional services provider by the end of this decade. It is driven by where we see the world going, where we see our clients going and what we need to do to serve them. We recognize that, like our clients, we have to adapt now to our changing world to stay ahead of the competition and become even more relevant in the eyes of our stakeholders.

    We’re making significant changes around how we operate and how we deliver client services to respond to the changing world and our client’s needs. Vision 2020 is underpinned by our promise to deliver exceptional client service worldwide. We are committed to bringing each client a great team — connected, responsive and insightful — and one that reflects a diverse mix of talented people who embrace our purpose, demonstrate our commitment to inclusiveness and exhibit a desire to exceed expectations. In all that we do, we maintain a strong commitment to our values, which guide our actions.

  • Under Vision 2020, what are you doing to maintain consistency in audit quality?

    Vision 2020 reinforces our belief that nothing is more important to our long-term relevance and sustainability than quality audit work. It is crucial for both our business and building trust in the capital markets. Our highly integrated global structure has strengthened our ability to establish and execute on policies and practices that improve service quality and, in particular, global audit quality.

    We are investing US$400m in our audit business. We are updating our tools, tailoring our methodologies and innovating service delivery through extensive use of analytics. Expanding our use of analytics will enable us to better capture and analyze large volumes of data, allowing us to obtain deeper business insights.

    We recently released a new global audit methodology for private middle-market clients. This is an important step in tailoring our services and driving audit quality.

  • Why did EY change its brand name?

    Vision 2020 gives us a new direction for our organization. Uniformly adopting EY as our brand name is a powerful way to signal that we are moving forward, and that we are taking the opportunity to strengthen and modernize how we present ourselves. We have also adopted a new tagline — Building a better working world — and updated our logo.

    As we looked at the work we do for our clients and what motivates our 175,000 people, we could see the important responsibility we have in building a better working world. This means understanding our role in building trust and confidence in the capital markets and economies across the world and using our global reach and our relationships with stakeholders to create positive change for our clients, our people and our communities. So we’ve changed our tagline to put front and center what we are doing every day — building a better working world.

  • What were the highlights of EY’s performance over the past year?

    EY global revenues grew 7.7% in local currency terms to US$25.8b. This was our fastest growth since 2008 with all service lines and geographies continuing to grow revenues and headcount, despite uneven market conditions in many parts of the world.

    In Assurance, we were able to strengthen our competitive market position by winning major audit mandates. Tax marked a third consecutive year of strong growth and Advisory achieved a third consecutive year of double-digit growth. Advisory is an important area of growth for our organization and our strategy for the Advisory business remains focused around risk and performance improvement. Both are closely related to our traditional services. Despite a tough deal market our Transaction Advisory Services (TAS) service line continued to grow and supported six of the top ten deals globally this year.

    Beyond financial results, we were very pleased to be recognized by Universum as the most attractive destination for business graduates looking for a career in professional services and as the second-most attractive employer overall. We were also happy to be recognized as one of the Great Places to Work Institute’s 25 Best Multinational Workplaces. Many of our country practices were also recognized for their efforts around building supportive working environments with regard to diversity and women.

    We are proud of these achievements because they reflect our commitment to attracting, developing and inspiring great people and developing future leaders.

  • What motivates you in your new role?

    I’m motivated when I see our people coming together as a team to serve our clients and support each other. I have the opportunity in this role to travel around and meet EY people from every corner of the world. And what I see consistently is our people working together in teams, sharing the same values, focused on delivering exceptional client service. More than that, they are proud of what they do and the role they play in building a better working world. Our people recognize that we play an important role in the global economy — helping the capital markets function more efficiently, as well as helping our clients to grow. That is what I find truly inspiring.