Accounting and Bookkeeping - Service Industries Overview

Publication Date: January 2004

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This industry consists of firms that provide a range of accounting services, including the audit and review of financial records, the preparation of financial statements and accounting reports, the development of budgets, the design of accounting systems, and the provision of advice on accounting matters.

These firms may also provide other related services such as bookkeeping and payroll services, tax return preparation, management consulting and insolvency services.

Highlights

• 21 783 active establishments
• $8.2 billion in receipts
• 28.9% operating profit margin
• Employs 68 500

Statistics Canada simplifies this myriad of activities to those in Chart C.

There are three main categories of professional accountants: chartered accountants (CA), certified management accountants (CMA) and certified general accountants (CGA). Provinces establish regulations that govern auditing and accountancy services offered in their regions.

Chart A - Number of Firms in Canada 2002

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In 2001, there were 21 783 establishments providing accounting services, a 13 percent increase from 1998. The offices of accountants represented 83 percent of total operating revenues and 83 percent of total salaries and wages paid.

Chart B - The Growth of Revenues in Canada ($ Billions)

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Auditing, general accounting and bookkeeping services represented 55 percent of sector revenues in 2001. Tax services generated 23 percent and consulting services 15 percent of sector revenues.  By contrast, incomes of insolvency and receivership service practitioners declined.

The traditional services of auditing, accounting and the preparation of income tax returns continued to be the backbone of the accounting sector, generating three quarters of the receipts. The largest 20 firms generated 54 percent of the total operating revenues in 2001, a one point increase from 53 percent in 2000.  These firms accounted for only 2.1 percent of establishments.

Small companies have depended on traditional accounting services while large companies have diversified to offer a wide range of consulting services such as planning and advisory services, assessments, and remuneration strategies, as well as services  insolvency and receivership.

Large accounting firms might not be able to offer this new range of services for very long.  Regulatory bodies concerned about conflicts of interest, have begun to limit the range of activities provided. These constraints might oblige the large chartered accounting practices to divert certain activities to smaller independent companies.

Employment Characteristics

More than 68 500 people work in this sector with 45 percent being categorized as professionals. There is a higher concentration of professionals in the large offices. These figures do not take into account associates or the self employed who are more likely to be professionals. The average annual wage paid was $44 900 in 2001. Offices that specialize in tax preparation use a large number of contract workers during the February to April period.

Operating Revenues

The accounting and bookkeeping industry generated $8.2 billion in operating revenues in 2001, an increase of 2.7 percent over 2000.  Ontario continues to lead all other provinces in 2001.  Half of the industry’s operating revenues ¹ were earned in Ontario, followed by Quebec with 17 percent.  British Columbia increased its share by two percentage points to 14 percent.

Chart D - Operating Revenues ($000,000)

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Profit Margins

Operating profit margins declined to 28.9 percent in 2001, down 2 percentage points from 2000. As the profit margin includes the undivided profits of partnerships and one-person businesses, it is higher than it would have been if only incorporated companies had been included.  Profit margins ranged from a low of 26.1 percent in Newfoundland to a high of 35.4 percent in New Brunswick.

1. Operating revenues to not include investment income (dividend, interest or capital gains.

Chart E - Operating Profit Margin (%)

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Source : For all data, Statistics Canada, 2001 Annual Report:  Survey of Accounting and Bookkeeping Services (March 2003)

• Canadian Institute of Chartered Accountants (CICA)
  www.cica.ca/index.cfm/ci_id/17150/la_id/1.htm
• Certified Management Accountants (CMA)
  www.cma-canada.org/cmacan/
• Certified General Accountants Association of Canada (CGA)
  http://www.cga-online.org