The power of
Annual Report
2020
Delivering Value
in Fiscal 2020
Fiscal 2020 will be remembered as the year of COVID-19. For
Accenture, it was a tale of two halves from a financial perspective, but
a single story of our market leadership throughout the year. We closed
the first half of our year with outstanding momentum—very strong
demand for our services, leading the industry in digital, cloud and
security, and we entered the second half with a new growth model
put in place on March 1, 2020.
Days later, the global pandemic was declared, triggering a global health
and financial crisis. Our ability to rapidly pivot in the second half of
fiscal 2020 demonstrates the unique value we bring to our clients, our
strong client and ecosystem partner relationships, the resilience of
our diversified business across industries, geographies and services, our
strength in digital, cloud and security, and the importance of scale.
We are proud that during fiscal 2020, Accenture’s team of approximately
506,000 people continued to deliver on our commitments to our
shareholders, with strong financial results, and to deliver on our
commitments to create value for our clients, our people, our partners
and our communities. And at one of the most challenging times in
world history, we have emerged stronger. We enter fiscal 2021 with
an even more durable foundation and an exciting future.
1
Delivering on Our Commitments
Turning to our clients. Our clients are the
Starting with our commitment to our
shareholders, Accenture shares provided
a 23 percent total return for the year ended
August 31—again outperforming the S&P 500
Index—and also provided a 23 percent com-
pound annual total return to shareholders over
the last five years, compared with 14 percent
for the S&P 500 Index. We did so as a leader
in responsible business, making a positive
difference for all our stakeholders.
Among the financial highlights
in fiscal 2020:
world’s leading companies, including more than
three-quarters of the Fortune Global 500, and
97 of our top 100 clients have been with us for
over 10 years. We ended fiscal 2020 with 216
Diamond Clients, our largest client relationships,
representing a net increase of 15 from fiscal 2019.
Our clients rely on us for mission-critical work and
the breadth, depth and scale of our capabilities to
help build their digital core, transform operations
and accelerate revenue growth. During the crisis,
we deepened their trust by delivering seamlessly
and enabling them to quickly adjust to the new
demands. For example, we continued closing the
books on time for more than 70 public companies
• We delivered record new bookings of
and going live with around-the-clock new tech-
$50 billion for the year.
• With revenue growth of 4 percent in
local currency, we continued to grow
well ahead of the market.
• We delivered strong profitability,
expanding operating margin 10 basis
points while continuing to invest at
scale in our business and our people.
• GAAP diluted earnings per share of
$7.89 increased 7 percent from fiscal 2019;
excluding $0.43 in gains on an investment,
nology releases for our clients every 15 minutes,
on average. Immediately after COVID-19 struck,
we worked with Microsoft to implement Teams
for numerous clients, including the U.K.’s National
Health Service—where we enabled 1.2 million
people to connect and better communicate with
each other in just seven days. We also built an
AI-driven virtual agent for India’s MyGov platform
that empowered 1.3 billion people with accurate,
up-to-date information about COVID-19.
We drive outcomes at speed for our clients with
adjusted EPS of $7.46 rose 1 percent.
our powerful ecosystem relationships, such as
• Free cash flow was a record $7.6 billion
and we returned $5 billion in cash to
shareholders, continuing to deliver on our
disciplined capital allocation model.
Adobe, Alibaba, Amazon Web Services, Blue
Yonder, Cisco, Dell, Google, HPE, IBM RedHat,
Microsoft, Oracle, Pegasystems, Salesforce, SAP,
ServiceNow, VMWare, Workday and many others.
• Shortly after year-end, the Board increased
our quarterly dividend 10 percent to
On March 1, we implemented our new growth
model to simplify our organizational structure and
$0.88 per share and approved $5 billion in
increase our agility to better serve clients at scale.
additional share repurchase authority.
Our teams can now move even more seamlessly
2
between our global and local capabilities, lever-
letter our latest reporting on a number of these
aging our network of more than 100 innovation
goals because the actions we take to meet these
hubs and our Advanced Technology and
goals are an important part of our commitment
Intelligent Operations Centers, while driving
to being a responsible business and to our market
value for clients in locally relevant ways.
leadership as a trusted partner. While today a
Throughout the year, we continued to deliver on
our commitments to our people. We increased
training hours by 6 percent while reducing training
costs by 11 percent to $866 million with our digital
learning platforms. Since March 1, 2020, in our
Technology services alone, we trained over
70,000 people in the hot skills needed by our
clients, including cloud and remote collaboration
tools. As part of our unwavering commitment to
inclusion and diversity, Accenture is now 45 percent
women, and we remain on track to meet our
gender-balanced workforce goal by 2025.
Our commitment to our communities includes
creating jobs and investing in innovation, as well
as our robust corporate citizenship program. For
example, together with Lincoln Financial Group,
ServiceNow and Verizon, in just 14 business days
we created People + Work Connect, which brings
together companies laying off or furloughing
people with companies in urgent need of workers.
Today, more than 400,000 jobs are available
on the platform. Through our Skills to Succeed
initiative with our network of strategic partners,
we have equipped nearly 3.6 million people to
date with the skills to get a job or build a business,
surpassing our goal of 3 million by 2020.
common, core set of metrics to report against
does not exist, we are part of the World Economic
Forum’s International Business Council, which is
working to develop them.
On our current schedule, we update our reporting
for the prior fiscal year in March of the next year.
Accordingly, our Corporate Citizenship Report
from March 2020 is our latest, and reflects our
fiscal 2019 progress, which will be updated in
March 2021 for fiscal 2020. We are particularly
proud that in fiscal 2019, we became the largest
professional services company to date to have a
target for emissions reduction approved by the
Science Based Targets Initiative, which aligns with
the Paris Agreement to limit global warming to
We also have a longstanding partnership with
1.5 degrees Celsius.
the UN Global Compact, championing the UN
Sustainable Development Goals. This year, for
the first time, we have incorporated in this annual
3
Emerging Stronger from the Crisis
• We captured new growth opportunities in
Our formula for market leadership is enduring:
We continually transform our business and
embrace change to create more value for our
clients with incredibly talented people. We view
fiscal 2021 as turning a page—we are no longer
navigating a crisis—we are facing a new reality,
and we are ready.
We emerged from the second half of fiscal
2020 stronger than when we entered, which
was our strategy. We set five measures of what
stronger means and have met each of them.
• We grew at approximately four times the
market (our basket of publicly traded companies)
compared to two times the market in the first
half of the year, growing market share faster
than pre-COVID.
• We had more clients with over $100 million
of bookings in our second half than in the
first half of the year, reinforcing our role as
a trusted transformation partner.
cloud, security, supply chain and digital
manufacturing, as well as work in the health
and public sector that includes contact tracing
for 10 state, provincial and local governments.
• We continued to invest significantly in our
people and in our business. In addition to
the training described above, we created
the capacity to promote and pay meaningful
bonuses for fiscal 2020 performance. We are
planning for a significant level of promotions
in our upcoming December cycle and remain
deeply committed to pay equity.
We also continued to increase our investments
for the future, at scale, including $1.5 billion in
acquisitions, which fuel organic growth. Among
the most strategically significant is Symantec
Cyber Security Services—making us one of the
largest global providers of managed security
services, which are critical to digital transformation.
In addition, we invested $871 million in R&D
in our assets, platforms and solutions, to accel-
erate adoption of new technologies such as
blockchain, robotics, 5G, quantum computing
4
and Edge computing. Today, we have a
we announced in October Accenture’s new
global portfolio of more than 7,900 patents
purpose: to deliver on the promise of technology
and pending patent applications.
and human ingenuity. We do this by embracing
• We delivered on our shareholder commitments.
We also reduced structural costs through our
new growth model, and accelerated our usual
level of annual performance management
change and leveraging collaboration to help clients
accelerate their digital journeys and create lasting,
360-degree value for all stakeholders across their
enterprises—as well as our own.
transitions to preserve our talented workforce
We define 360-degree value as delivering the
for the future while positioning ourselves for
financial business case and unique value a client
modest margin expansion and continued
may be seeking, and striving where possible, to
investment in our business in fiscal 2021.
partner with our clients to achieve greater prog-
Looking Ahead
ress on inclusion and diversity with our diverse
teams, reskill our clients’ employees, help our
clients achieve their sustainability goals, and bring
We serve our clients through our close proximity
meaningful experiences, both with Accenture and
to their businesses and ability to anticipate their
for the customers and employees of our clients.
needs, and then invest with speed and scale to
help them succeed. As COVID-19 and the related
changes in business and society have accelerated
the need for digital transformation, it became
clear that companies would need to move to the
cloud much faster. We announced the creation
of Accenture Cloud First in September and a
$3 billion investment over three years, building
on our approximately $12 billion in cloud revenue
for fiscal 2020. We are helping clients across all
industries accelerate their transformation in what
we believe is a once-in-a-digital-era, massive
re-platforming of global business over the
next five years.
Our culture is differentiated by shared success—
our commitment to making a positive difference
together with our clients, our people, our share-
holders, our partners and our communities
To better reflect our role in today’s world,
To support our new purpose and approach,
we recently launched our biggest brand campaign
in a decade, “Let there be change.” The campaign
both reflects the depth and breadth of Accenture’s
expertise and is an inspiration to our people and
our clients to embrace change for the benefit of all.
We believe today’s rapid acceleration to digital
presents us with a breakthrough opportunity
to create a better future for all. Our strategy is to
embed responsible business into our services
for our clients as well as to operate Accenture
as a responsible business. To help implement
this strategy, we recently appointed a Chief
Responsibility Officer and Global Sustainability
Services Lead who will be part of Accenture’s
Global Management Committee.
5
With respect to caring for the environment
through our own actions, we are building on our
earlier goals for emissions reduction and recently
announced three additional, industry-leading
goals: to achieve net-zero emissions, move to
zero waste and plan for water risk by 2025. For
our clients, we recently launched our myNav
Green Cloud Advisor to enable sustainable
migration to the cloud.
We have an unwavering commitment to
inclusion and diversity and a culture of equality,
which is core to our values as a company and
critical to our success and continued innovation.
We recently announced new goals for increased
race and ethnicity representation in our workforce
overall and among managing directors in
the U.S., the U.K. and South Africa.
I am incredibly proud of the swift response
by our people to stand together against racism
and inequality in the face of more tragic losses
of African American and Black lives in the U.S.
We launched new mandatory training in the
U.S.—and will roll it out in other markets—to
support our people in identifying and speaking
up about racism and reinforcing what we expect
of our people. We also pledged to increase
community investments to support economic
inclusion, such as our new Black Founders
Development Program.
Throughout our history, the
people of Accenture have
embraced constant change.
Today is no different. I want to
thank all our Accenture people
for their incredible dedication,
perseverance and commitment
both in fiscal 2020 and as we
face our new reality. I also want
to thank all our shareholders for
their continued trust and support.
As a company, we have never
been more committed to creating
shared success for all.
Julie Sweet
Chief Executive Officer
October 22, 2020
6
We delivered strong performance in
fiscal 2020, reflecting continued growth
ahead of the market, strong profitability
and record free cash flow, driving
superior shareholder value.
Twelve months ended August 31, 2020
REVENUES
NEW BOOKINGS
$44.3B An increase of 4% in
local currency and
3% in U.S. dollars from
fiscal 2019
$49.6B Record bookings, an
increase of 10% in local
currency and 9%
in U.S. dollars
DILUTED EARNINGS PER SHARE
OPERATING MARGIN
$ 7.89 An increase of 7% from
fiscal 2019, including
$0.43 of gains on an
investment; excluding
these gains, adjusted
EPS of $7.46 increased
1% from fiscal 2019
14.7%
An expansion of
10 basis points from
fiscal 2019
FREE CASH FLOW
CASH RETURNED TO SHAREHOLDERS
$ 7.6B Defined as operating cash
flow of $8.2 billion net of
property and equipment
additions of $599 million
$ 5.0B Defined as cash dividends
of $2.04 billion plus
share repurchases of
$2.92 billion
8
Comparison of Cumulative Total Return
August 31, 2015—
August 31, 2020
Accenture vs. S&P 500
Stock Index and S&P 500
Information Technology
Sector Index
The performance graph to the right shows
the cumulative total shareholder return on
our Class A shares for the period starting on
August 31, 2015, and ending on August 31, 2020,
which was the end of fiscal 2020. This is compared
with the cumulative total returns over the same
$400
$350
$300
$250
$200
$150
period of the S&P 500 Stock Index and the
$100
S&P 500 Information Technology Sector Index.
The graph assumes that,on August 31, 2015,
$100 was invested in our Class A shares and $100
was invested in each of the other two indices,
with dividends reinvested on the ex-dividend
date without payment of any commissions.
The performance shown in the graph represents
past performance and should not be considered
an indication of future performance.
$50
$0
2015
2016
2017
2018
2019
2020
Accenture
S&P 500 Index
S&P 500 Information Technology Sector Index
Index Prices as of August 31
2015
2016
2017
2018
2019
2020
Accenture
$100
$124
$145
$190
$227
$279
S&P 500 Index
$100
$113
$131
$157
$161
$196
S&P 500 IT Sector Index
$100
$119
$156
$207
$220
$348
9
FORTUNE’s World’s Most
Admired Companies
No. 1 in our industry for
7 years, marking 18
consecutive years on list
Interbrand's
Best Global Brands
No. 31, marking
19 consecutive years
Barron’s Most Sustainable
International Companies
Among Top 2 for
2 consecutive years
Ethisphere’s World’s Most
Ethical Companies
13 consecutive years
Forbes’ Global 2000
No. 205, marking
17 consecutive years
Dow Jones Sustainability
Index North America and
FTSE4Good Global Index
Since 2005
Fast Company’s Most
Innovative Companies
2 consecutive years
FORTUNE’s Global 500
No. 279, marking
19 consecutive years
CDP’s Climate
Change “A List"
5 years
Awards & Recognition
Refinitiv Diversity &
Inclusion Index
Among Top 3 for
3 consecutive years
Great Place to Work/
FORTUNE’s 100 Best
Companies to Work For
In Japan, Mexico, U.K. and U.S.
Apertura Mejores
Empleadores in
Argentina
7 consecutive years
Human Rights
Campaign’s Corporate
Equality Index
In Chile, Mexico and U.S.
Stonewall Global
Workplace Equality
Index
6 consecutive years
Randstad’s Most
Attractive Employers
in Greater China
3 consecutive years
Business Today/People
Strong’s Best Companies
to Work For in India
Among Top 5 for
7 consecutive years
Disability Equality Index
4 consecutive years
South African Workplace
Equality Index
Achieved Gold status
10
Stock listing
Accenture plc Class A ordinary shares
are traded on the New York Stock
Exchange under the symbol ACN.
Available information
Our website address is accenture.com.
We use our website as a channel of
distribution for company information.
We make available free of charge on
the Investor Relations section of our
website (investor.accenture.com) our
Annual Report on Form 10-K, Quarterly
Reports on Form 10-Q, Current Reports
Accenture’s annual report to security
might cause such differences, some
holders for purposes of Rule 14a-3(b)
of which could be material, include,
of the Exchange Act.
but are not limited to, the factors
Trademark references
discussed in our Annual Report on
Form 10-K and Quarterly Reports
on Form 10-Q (available through
Rights to trademarks referenced herein,
the Investor Relations section of our
other than Accenture trademarks,
website at investor.accenture.com)
belong to their respective owners. We
under the sections entitled “Risk
disclaim proprietary interest in the marks
Factors.” Our forward-looking state-
and names of others.
Forward-looking statements
and certain factors that may
affect our business
ments speak only as of the date of this
letter or as of the date they are made,
and we undertake no obligation to
update them.
on Form 8-K and all amendments to
We have included in this letter
those reports as soon as reasonably
“forward-looking statements” within
Reconciliation of
non-GAAP measures
practicable after such material is elec-
tronically filed with or furnished to the
Securities and Exchange Commission
(the “SEC”) pursuant to Section 13(a)
or 15(d) of the Securities Exchange Act
of 1934 (the “Exchange Act”). We also
make available through our website
other reports filed with or furnished
to the SEC under the Exchange Act,
including our proxy statements and
reports filed by officers and directors
under Section 16(a) of the Exchange
Act, as well as our Code of Business
Ethics. Financial and other material
information regarding Accenture is
routinely posted on and accessible
at investor.accenture.com. We do not
intend for information contained in this
letter or on our website to be part of
the Annual Report on Form 10-K.
This letter and our Annual Report on
Form 10-K for the fiscal year ended
August 31, 2020, together constitute
the meaning of Section 27A of the
This letter contains certain non-GAAP
Securities Act of 1933 and Section
(Generally Accepted Accounting
21E of the Exchange Act relating to
Principles) measures that our
our operations, results of operations
management believes provide our
and other matters that are based on
shareholders with additional insights
our current expectations, estimates,
into Accenture’s results of operations.
assumptions and projections. Words
The non-GAAP measures in this letter
such as “will,” “plan,” “believe” and
are supplemental in nature. They
similar expressions are used to iden-
should not be considered in isolation
tify these forward-looking statements.
or as alternatives to net income as
These statements are not guarantees
indicators of company performance, to
of future performance and involve
cash flows from operating activities as
risks, uncertainties and assumptions
measures of liquidity, or to other financial
that are difficult to predict.
information prepared in accordance
Forward-looking statements are
based upon assumptions as to
future events that may not prove to
be accurate. Actual outcomes and
results may differ materially from
what is expressed or forecast in these
forward-looking statements. Risks,
uncertainties and other factors that
with GAAP. Reconciliations of this
non-GAAP financial information to
Accenture’s financial statements as
prepared under GAAP are included
in this report.
All amounts throughout this letter are stated
in U.S. dollars, except where noted.
11
Table of Contents
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
☑
Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended August 31, 2020
Commission File Number: 001-34448
Accenture plc
(Exact name of registrant as specified in its charter)
Ireland
(State or other jurisdiction of
incorporation or organization)
98-0627530
(I.R.S. Employer Identification No.)
1 Grand Canal Square,
Grand Canal Harbour,
Dublin 2, Ireland
(Address of principal executive offices)
(353) (1) 646-2000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Class A ordinary shares, par value $0.0000225 per share
ACN
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☑ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of
1934. Yes ☐ No ☑
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405
of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit
such files). Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or
an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth
company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Smaller reporting company
☑
☐
Accelerated filer
Emerging growth company
☐
☐
Non-accelerated filer
☐
If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with
any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its
internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm
that prepared or issued its audit report. ☑
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☑
The aggregate market value of the common equity of the registrant held by non-affiliates of the registrant on February 28, 2020 was approximately
$115,077,476,776 based on the closing price of the registrant’s Class A ordinary shares, par value $0.0000225 per share, reported on the New York
Stock Exchange on such date of $180.59 per share and on the par value of the registrant’s Class X ordinary shares, par value $0.0000225 per
share.
The number of shares of the registrant’s Class A ordinary shares, par value $0.0000225 per share, outstanding as of October 8, 2020 was
658,883,029 (which number includes 25,317,084 issued shares held by the registrant). The number of shares of the registrant’s Class X ordinary
shares, par value $0.0000225 per share, outstanding as of October 8, 2020 was 527,509.
Portions of the definitive proxy statement to be filed with the Securities and Exchange Commission pursuant to Regulation 14A relating to the
registrant’s Annual General Meeting of Shareholders, to be held on February 3, 2021, will be incorporated by reference in this Form 10-K in
response to Items 10, 11, 12, 13 and 14 of Part III. The definitive proxy statement will be filed with the SEC not later than 120 days after the
registrant’s fiscal year ended August 31, 2020.
DOCUMENTS INCORPORATED BY REFERENCE
Table of Contents
Table of Contents
Business
Part I
Item 1.
Item 1A. Risk Factors
Item 1B. Unresolved Staff Comments
Item 2.
Properties
Item 3.
Item 4.
Part II
Item 5.
Legal Proceedings
Mine Safety Disclosures
Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer
Purchases of Equity Securities
Item 6.
Selected Financial Data
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 7.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Item 8.
Financial Statements and Supplementary Data
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
Item 9.
Item 9A. Controls and Procedures
Item 9B. Other Information
Part III
Item 10. Directors, Executive Officers and Corporate Governance
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related
Shareholder Matters
Item 13. Certain Relationships and Related Transactions, and Director Independence
Item 14. Principal Accountant Fees and Services
Part IV
Item 15. Exhibits, Financial Statement Schedules
Item 16. Form 10-K Summary
Signatures
Page
2
10
24
24
24
24
25
27
28
38
39
39
39
40
41
41
42
42
43
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46
47
Table of Contents
ACCENTURE 2020 FORM 10-K
Part I
Part I
1
Disclosure Regarding Forward-Looking Statements
This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”) relating to our operations, results
of operations and other matters that are based on our current expectations, estimates, assumptions and projections. Words
such as “may,” “will,” “should,” “likely,” “anticipates,” “expects,” “intends,” “plans,” “projects,” “believes,” “estimates,”
“positioned,” “outlook” and similar expressions are used to identify these forward-looking statements. These statements are
not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Forward-
looking statements are based upon assumptions as to future events that may not prove to be accurate. Actual outcomes and
results may differ materially from what is expressed or forecast in these forward-looking statements. Risks, uncertainties and
other factors that might cause such differences, some of which could be material, include, but are not limited to, the factors
discussed below under the section entitled “Risk Factors.” Our forward-looking statements speak only as of the date of this
report or as of the date they are made, and we undertake no obligation to update them.
Available Information
Our website address is www.accenture.com. We use our website as a channel of distribution for company information. We
make available free of charge on the Investor Relations section of our website (http://investor.accenture.com) our Annual
Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all amendments to those reports
as soon as reasonably practicable after such material is electronically filed with or furnished to the Securities and Exchange
Commission (the “SEC”) pursuant to Section 13(a) or 15(d) of the Exchange Act. We also make available through our
website other reports filed with or furnished to the SEC under the Exchange Act, including our proxy statements and reports
filed by officers and directors under Section 16(a) of the Exchange Act, as well as our Code of Business Ethics. Financial and
other material information regarding us is routinely posted on and accessible at http://investor.accenture.com. We do not
intend for information contained in our website to be part of this Annual Report on Form 10-K.
The SEC maintains an Internet site (http://www.sec.gov) that contains reports, proxy and information statements and other
information regarding issuers that file electronically with the SEC. Any materials we file with the SEC are available on such
Internet site.
In this Annual Report on Form 10-K, we use the terms “Accenture,” “we,” the “Company,” “our” and “us” to refer to Accenture
plc and its subsidiaries. All references to years, unless otherwise noted, refer to our fiscal year, which ends on August 31.
Table of Contents
ACCENTURE 2020 FORM 10-K
Item 1. Business
2
Item 1. Business
Overview
Accenture is a leading global professional services company, providing a broad range
of services in strategy and consulting, interactive, technology and operations, with
digital capabilities across all of these services. We combine unmatched experience
and specialized capabilities across more than 40 industries, which are organized
across our five industry groups, together with our culture of innovation. Our
approximately 506,000 people serve clients in more than 120 countries to help clients
build their digital core, transform their operations, and accelerate revenue growth —
creating tangible value across their enterprises at speed and scale.
Accenture serves clients in three geographic markets: North
America, Europe and Growth Markets (Asia Pacific, Latin America,
Africa and the Middle East). Our geographic markets bring
together capabilities from across the organization in Strategy &
Consulting, Interactive, Technology and Operations—infusing
digital skills and industry and functional expertise throughout—to
deliver value to our clients.
Effective March 1, 2020, we began managing our business under
a new growth model through the three geographic markets, which
also became our reportable segments in the third quarter of fiscal
2020. The change was designed to help us better serve our
clients and continue to scale our business. Prior to this change,
our reportable segments were our five operating groups,
Communications, Media & Technology, Financial Services, Health
& Public Service, Products and Resources, which we now refer to
as our industry groups.
Under the new growth model, we continue to go to market
primarily by industry, leveraging our deep expertise across more
than 40 industries. The new model simplified our organizational
structure and increased our agility to form multi-service teams to
meet client needs rapidly and at scale. It is also accelerating
innovation by enabling our teams to move seamlessly between
global and local, leveraging our network of more than 100
innovation hubs, our technology expertise and ecosystem
relationships, and our global delivery capabilities to drive value for
clients.
During fiscal 2020, we continued to make significant investments
—in strategic acquisitions, in research and development in our
assets, platforms and solutions, and in attracting and developing
talent—to further enhance our differentiation and competitiveness
in the marketplace. At year-end, we had more than 7,900 patents
and pending patent applications worldwide. Our disciplined
acquisition strategy, which is an engine to fuel organic growth, is
focused on scaling our business in high-growth areas; adding
skills and capabilities in new areas; and deepening our industry
and functional expertise. In fiscal 2020, we invested more than
$1.5 billion across 34 strategic acquisitions.
Our revenues for fiscal 2020 were
$44.3
billion,
506,000
people
and we employed approximately
as of August 31, 2020. Our
revenues are derived primarily from
Forbes Global 2000 companies,
governments and government
agencies. We have
and have partnered with
long-term
relationships
97 of our
top 100
clients
> 10 years.
in fiscal 2020 for
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Our Strategy
Our growth strategy begins with a focus on what our clients need. Regardless of industry, our clients
must transform every aspect of their business to meet the needs of today’s digital world. We are helping
our clients use technology to build their digital core to drive enterprise-wide transformation—such as
moving them to the cloud and embedding security across the enterprise, by transforming their operations
—such as replatforming their ERP systems and through our Operations services and Industry X, and by
accelerating their growth—such as through creating omni-channel experiences through Interactive.
We are uniquely able to deliver this transformation because of our ability to bring applied innovation and
deliver 360-degree value for our clients. We define 360-degree value as delivering the financial
business case and unique value a client may be seeking, and striving where possible to partner with our
clients to achieve greater progress on inclusion and diversity with our diverse teams, reskill our clients’
employees, help our clients achieve their sustainability goals, and create meaningful experiences, both
with Accenture and for the customers and employees of our clients.
We are able to leverage our scale and global footprint, and seamlessly move between global and local,
embedding responsible business by design in everything we do. Our strong ecosystem partnerships,
together with our assets and platforms, including MyWizard, MyNav and Synops, position Accenture to
consistently deliver tangible value for our clients.
Key enablers of our growth strategy include:
Our People – As a talent- and innovation-led organization, across our entire business our
people have highly specialized skills that drive our differentiation and competitiveness. We
are deeply committed to investing in our people to ensure they have opportunities to learn
and grow in their careers through their work experience and continued development, training
and reskilling, and we have an unwavering commitment to inclusion and diversity;
Our Commitment – We are a purpose driven company, committed to delivering on the
promise of technology and human ingenuity. Our culture is underpinned by our core values
and Code of Business Ethics which are key drivers of the trust our clients and partners place
in us to deliver tangible value and outcomes for them; and
Our Foundation – The new growth model and our enduring shareholder value creation
model are key elements of the foundation that enable us to execute on our growth strategy.
Percent of Fiscal 2020 Revenue
Geographic Markets
The geographic markets, North America, Europe and Growth
Markets, assemble integrated, multi-service client teams,
which typically consist of industry experts, capability
specialists and professionals with local market knowledge and
experience. The geographic markets have primary
responsibility for building and sustaining long-term client
relationships; bringing together our expertise and collaborating
with the other parts of our business to sell and deliver the full
range of our services and capabilities; ensuring client
satisfaction; and achieving revenue and profitability objectives.
While we serve clients in locally relevant ways, our global
footprint and scale in every major country give us the ability to
leverage our experience and talent from around the world to
accelerate outcomes for our clients.
Our three geographic markets are Accenture’s reporting
segments. The percent of our revenues represented by each
market is shown at right.
20% —GrowthMarkets32% —Europe47% —NorthAmerica
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Services
Strategy & Consulting
Strategy & Consulting works with C-suite executives and boards of the world’s leading organizations, helping them
accelerate their digital transformation to enhance competitiveness, grow profitability and deliver sustainable stakeholder
value. We use our deep industry and functional expertise underpinned by data, analytics, artificial intelligence, and innovation
to help clients solve a diverse set of business challenges, including identifying and developing new markets, products and
services; optimizing cost structures; maximizing human performance; harnessing data to improve decision-making; mitigating
risk and enhancing security; implementing modern change management programs; shaping and delivering value from large-
scale cloud migrations; building more resilient supply chains; and reinventing manufacturing and operations with smart,
connected products and platforms.
Interactive
Interactive combines creativity and technology in service of meaningful experiences that drive sustainable growth and value
for our clients. Our capabilities span ideation to execution: growth, product and culture design; technology and experience
platforms; creative, media and marketing strategy; and campaign, content and channel orchestration. With strong client
relationships and deep industry expertise, we are uniquely positioned to design, build, communicate and run experiences,
reimagining the entire journey for customers, employees, patients and citizens alike. We embed this focus on experience
across our services.
Technology
Technology provides innovative and comprehensive services and solutions that span cloud; systems integration and
application management; security; intelligent platform services; infrastructure services; software engineering services; data
and artificial intelligence; and global delivery through our Advanced Technology Centers. We continuously innovate our
services, capabilities and platforms through early adoption of new technologies such as blockchain, robotics, 5G, quantum
computing and Edge computing. Accenture provides a powerful range of capabilities that addresses the challenges faced by
organizations today, including how to manage change and develop new growth opportunities.
Technology also includes the innovation and R&D activities in our Labs and our investments in emerging technologies
through Accenture Ventures. Our innovation hubs around the world help clients innovate at unmatched speed, scope and
scale. We have strong relationships with the world’s leading technology companies, as well as emerging start-ups, which
enable us to enhance our service offerings, augment our capabilities and deliver distinctive business value to our clients. Our
strong ecosystem relationships provide a significant competitive advantage, and we are a key partner of a broad range of
technology providers, including Adobe, Alibaba, Amazon Web Services, Blue Yonder, Cisco, Dell, Google, HPE, IBM RedHat,
Microsoft, Oracle, Pegasystems, Salesforce, SAP, ServiceNow, VMWare, Workday and many others. We push the
boundaries of what technology can enable and help clients get the most value and best capabilities out of platforms.
Operations
We operate business processes on behalf of clients for specific enterprise functions, including finance and accounting,
sourcing and procurement, supply chain, marketing and sales, as well as industry-specific services, such as platform trust
and safety, banking, insurance and health services. We help organizations to reinvent themselves through intelligent
operations, enabled by SynOps, our human-machine platform, powered by data and analytics, artificial intelligence, digital
technology, and exceptional people to provide tangible business outcomes at speed and scale, including improved
productivity and customer experiences as well as sustained long-term growth.
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Industry Groups
One of our competitive advantages is the depth and breadth of our industry expertise. Our industry focus gives us an
understanding of industry evolution, business issues and new and emerging technologies, enabling us to deliver innovative
solutions tailored to each client. It also allows us to bring cross-industry insights to our clients to accelerate value creation.
Our capabilities across more than 40 industries are organized in the following five industry groups.
Communications, Media & Technology
Communications & Media
High Tech
Software & Platforms
Clients Served
Wireline, wireless, broadcast, entertainment, print,
publishing, cable and satellite communications service
providers
Percent of Group’s FY20 Revenue
Enterprise technology, network
equipment, semiconductor,
consumer technology,
aerospace & defense, and
medical equipment companies
Cloud-based enterprise and consumer
software companies; and social, e-
commerce, retail, content, advertising and
gaming platform companies
45%
21%
34%
Financial Services
Banking & Capital Markets
Clients Served
Insurance
Retail and commercial banks, mortgage lenders, payment providers, investment banks, wealth and asset
management firms, broker/dealers, depositories, exchanges, clearing and settlement organizations, and
other diversified financial enterprises
Property and casualty insurers,
life insurers, reinsurance firms
and insurance brokers
Percent of Group’s FY20 Revenue
69%
Health & Public Service
Health
Clients Served
Healthcare providers, such as hospitals,
public health systems, policy-making
authorities, health insurers (payers), and
industry organizations and associations
Percent of Group’s FY20 Revenue
31%
Public Service
Defense departments and military forces; public safety authorities; justice departments;
human and social services agencies; educational institutions; non-profit organizations;
cities; and postal, customs, revenue and tax agencies
36%
64%
Our work with clients in the U.S. federal government is delivered through Accenture Federal Services, a U.S. company and a
wholly owned subsidiary of Accenture LLP, and represented approximately 35% of our Health & Public Service industry
group’s revenues and 14% of our North America revenues in fiscal 2020.
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Products
Consumer Goods, Retail & Travel Services
Industrial
Life Sciences
Clients Served
Food and beverage, household goods, personal care, tobacco,
fashion/apparel, agribusiness and consumer health companies;
supermarkets, hardline retailers, mass-merchandise
discounters, department stores and specialty retailers; airlines;
and hospitality and travel services companies
Industrial & electrical equipment
manufacturers and suppliers; and
construction, heavy equipment,
consumer durables, engineering
services, real estate business
services, freight & logistics, and
automotive and public
transportation companies
Biopharmaceutical, medical
technology, and biotechnology
companies and distributors
Percent of Group’s FY20 Revenue
52%
25%
24%
Amounts do not total due to rounding.
Resources
Chemicals & Natural Resources
Energy
Utilities
Clients Served
Petrochemicals, specialty chemicals,
polymers and plastics, gases and
agricultural chemicals companies, as
well as the metals, mining, forest
products and building materials
industries
Percent of Group’s FY20 Revenue
Companies in the oil and gas industry,
including upstream, midstream,
downstream, oilfield services, clean
energy and energy trading companies
Electric, gas and water utilities; new energy providers
30%
28%
42%
Global Delivery Capability
A key differentiator is our global delivery capability, powered by the world’s largest network of Advanced Technology and
Intelligent Operations Centers. This allows us to bring the right talent at the right time to our clients from anywhere in the
world—both in physical and virtual working environments—a capability that is particularly crucial as business needs and
conditions change rapidly. Our global approach provides scalable innovation; standardized processes, methods and tools;
automation and artificial intelligence; industry expertise and specialized capabilities; cost advantages; foreign language
fluency; proximity to clients; and time zone advantages—to deliver high-quality solutions. Emphasizing quality, productivity,
reduced risk, speed to market and predictability, our global delivery model supports all parts of our business to provide clients
with price-competitive services and solutions.
Innovation and Intellectual Property
We are committed to developing leading-edge ideas and technologies and see innovation as a source of competitive
advantage. We use our investment in research and development—on which we spent $871 million, $800 million, and $791
million in fiscal 2020, 2019 and 2018 respectively—to help clients address new realities in the marketplace and to face the
future with confidence.
Our innovation experts work with clients across the world to imagine their future, build and co-create innovative business
strategies and technology solutions, and then scale those solutions to sustain innovation. We harness our unique intellectual
property to deliver these innovation services.
We leverage patent, trade secret and copyright laws as well as contractual arrangements and confidentiality procedures to
protect the intellectual property in our innovative services and solutions. These include our proprietary platforms, software,
reusable knowledge capital, and other innovations. We also have policies to respect the intellectual property rights of third
parties, such as our clients, partners, vendors and others. As of August 31, 2020, we had a portfolio of more than 7,900
patents and pending patent applications worldwide.
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Underpinning our innovation services and our global strength in intellectual property is the Accenture Innovation Architecture,
which brings together the diverse capabilities from Accenture Research, Accenture Ventures and Accenture Labs to our
Studios, Innovation Centers and Delivery Centers.
Our research and thought leadership teams help identify market, technology and industry trends. Accenture Ventures
partners with and invests in growth-stage companies that create innovative enterprise technologies. Accenture Labs incubate
and prototype new concepts through applied research and development projects. The new Technology Incubation Group
incubates and applies emerging technology innovation to business architectures, including blockchain, extended reality and
quantum. Our network of more than 100 innovation hubs uses those insights and technologies to help clients imagine, build
and scale for the future. We believe this combination of talent, assets and capabilities makes Accenture one of the leading
strategic innovation partners for our clients.
To protect Accenture’s brands, we rely on intellectual property laws and trademark registrations held around the world.
Trademarks appearing in this report are the trademarks or registered trademarks of Accenture Global Services Limited,
Accenture Global Solutions Limited, or third parties, as applicable.
Competition
Accenture operates in a highly competitive and rapidly changing global marketplace. We compete with a variety of
organizations that offer services and solutions competitive with those we offer—but we believe no other company offers the
full range of services at scale that Accenture does, which uniquely positions us in a highly competitive market. Our clients
typically retain us on a non-exclusive basis.
Our competitors include large multinational IT service providers, including the services arms of large global technology
providers; off-shore IT service providers in lower-cost locations, particularly in India; accounting firms that provide consulting
and other IT services and solutions; solution or service providers that compete with us in a specific geographic market,
industry or service area, including advertising agencies and technology start-ups; and in-house IT departments of large
corporations that use their own resources rather than engage an outside firm.
We believe Accenture competes successfully in the marketplace because:
• We are a trusted partner with long-term client relationships and a proven track record for delivering on large, complex
programs that drive tangible value;
• We provide a broad range of services with our unique approach to bring integrated multi-service teams at scale
and have a significant presence in every major geographic market, enabling us to leverage our global expertise in a
local context and deliver tangible value;
• We have deep industry and cross-industry expertise, which enable us to accelerate value as clients transform their
products, customer experiences and business operations;
•
•
The breadth and scale of our technology capabilities, combined with our strong relationships with our technology
ecosystem partners, enable us to help clients transform and re-platform in a sustainable way at speed; and
Our goal is to recruit the most talented people in our markets, and we have an unwavering commitment to inclusion
and diversity, which creates an environment that unleashes innovation, and a world-class learning organization that
helps us continuously invest in the development of our people.
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Information About Our Executive Officers
Our executive officers as of October 22, 2020 are as follows:
Gianfranco Casati, 61, became our chief executive officer—Growth Markets in January 2014. From
September 2006 to January 2014, he served as our group chief executive—Products. From April
2002 to September 2006, Mr. Casati was managing director of the Products Europe operating unit.
He also served as our country managing director for Italy and as chairman of our geographic council
in its IGEM (Italy, Greece, emerging markets) region, supervising our offices in Italy, Greece and
several Eastern European countries. Mr. Casati has been with Accenture for 36 years.
Richard P. Clark, 59, became our chief accounting officer in September 2013 and has served as
our corporate controller since September 2010. Prior to that, Mr. Clark served as our senior
managing director of investor relations from September 2006 to September 2010. Previously he
served as our finance director—Communications, Media & Technology from July 2001 to September
2006 and as our finance director—Resources from 1998 to July 2001. Mr. Clark has been with
Accenture for 37 years.
Jo Deblaere, 58, became our chief operating officer in September 2009. Mr. Deblaere also served
as our chief executive—Europe from January 2014 to February 2020. From September 2006 to
September 2009, Mr. Deblaere served as our chief operating officer—Outsourcing. Prior to that,
from September 2005 to September 2006, he led our global network of business process
outsourcing delivery centers. From September 2000 to September 2005, he had overall
responsibility for work with public-sector clients in Western Europe. Mr. Deblaere has been with
Accenture for 35 years.
Jimmy Etheredge, 57, became our chief executive officer—North America in September 2019.
From December 2016 to September 2019, Mr. Etheredge served as senior managing director—US
Southeast, responsible for our business in 10 states, including the key markets of Atlanta, Charlotte
and Washington, D.C. Previously, he served as senior managing director—Products in North
America from 2011 until December 2016. Mr. Etheredge has been with Accenture for 35 years.
KC McClure, 55, became our chief financial officer in January 2019. From June 2018 to January
2019, she served as managing director—Finance Operations, where she led our finance operations
across the entirety of our businesses. From December 2016 to May 2018, she served as our finance
director—Communications, Media & Technology. Prior to assuming that role, she served as our
head of investor relations from September 2010 to November 2016, and from March 2002 to August
2010, she served as our finance director—Health & Public Service. Ms. McClure has been with
Accenture for 32 years.
Jean-Marc Ollagnier, 58, became our chief executive officer—Europe in March 2020. From March
2011 to March 2020, Mr. Ollagnier served as our group chief executive—Resources. From
September 2006 to March 2011, Mr. Ollagnier led Resources in Europe, Latin America, the Middle
East and Africa. Previously, he served as our global managing director—Financial Services
Solutions group and as our geographic unit managing director—Gallia. Mr. Ollagnier has been with
Accenture for 34 years.
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David P. Rowland, 59, became executive chairman of the Board of Directors in September 2019.
From January 2019 to September 2019, he served as our interim chief executive officer. Mr.
Rowland was our chief financial officer from July 2013 to January 2019. From October 2006 to July
2013, he was our senior vice president—Finance. Previously, Mr. Rowland was our managing
director—Finance Operations from July 2001 to October 2006. Prior to assuming that role, he
served as our finance director—Communications, Media & Technology and as our finance director—
Products. Mr. Rowland has been with Accenture for 37 years and has served as a director since
January 2019. Prior to its merger with and into Accenture plc in March 2018, Mr. Rowland also
served on the board of Accenture Holdings plc.
Ellyn J. Shook, 57, became our chief leadership officer in December 2015 and has also served as
our chief human resources officer since March 2014. From 2012 to March 2014, Ms. Shook was our
senior managing director—Human Resources and head of our Human Resources Centers of
Expertise. From 2004 to 2011, she served as the global human resources lead for career
management, performance management, total rewards, employee engagement and mergers and
acquisitions. Ms. Shook has been with Accenture for 32 years.
Julie Sweet, 53, became our chief executive officer in September 2019. From June 2015 to
September 2019, she served as our chief executive officer—North America. From March 2010 to
June 2015, she served as our general counsel, secretary and chief compliance officer. Prior to
joining Accenture in 2010, Ms. Sweet was a partner for 10 years in the law firm Cravath, Swaine &
Moore LLP, which she joined as an associate in 1992. Ms. Sweet has been with Accenture for 10
years and has served as a director since September 2019.
Joel Unruch, 42, became our general counsel in September 2019 and has served as our corporate
secretary since June 2015. Mr. Unruch also served as our chief compliance officer from September
2019 to January 2020. Mr. Unruch joined Accenture in 2011 as our assistant general counsel and
assistant secretary and also oversaw ventures & acquisitions and alliances & ecosystems practices
for our legal group. Prior to joining Accenture, Mr. Unruch was corporate counsel at Amazon.com
and previously an associate in the corporate department of the law firm Cravath, Swaine & Moore
LLP. Mr. Unruch has been with Accenture for 9 years.
Organizational Structure
Accenture plc was incorporated in Ireland on June 10, 2009 as a public limited company. We operate our business through
subsidiaries of Accenture plc.
The Consolidated Financial Statements reflect the ownership interests in Accenture Holdings plc (for applicable periods) and
Accenture Canada Holdings Inc. held by certain current and former members of Accenture Leadership as noncontrolling
interests. The noncontrolling ownership interests percentage was less than 1% as of August 31, 2020. “Accenture
Leadership” is comprised of members of our global management committee (our primary management and leadership team,
which consists of approximately 40 of our most senior leaders), senior managing directors and managing directors.
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Item 1A. Risk Factors
In addition to the other information set forth in this report, you should carefully
consider the following factors which could materially adversely affect our business,
financial condition, results of operations (including revenues and profitability) and/or
stock price. Our business is also subject to general risks and uncertainties that may
broadly affect companies, including us. Additional risks and uncertainties not
currently known to us or that we currently deem to be immaterial also could materially
adversely affect our business, financial condition, results of operations and/or stock
price.
Our results of operations have been significantly adversely affected and could in the future be
materially adversely impacted by the COVID-19 pandemic.
The COVID-19 pandemic has created significant volatility, uncertainty and economic disruption. The pandemic has resulted
in authorities around the world implementing numerous unprecedented measures such as travel restrictions, quarantines,
shelter in place orders, social distancing measures and temporary business closures. The pandemic and the actions taken
by governments, businesses and individuals in response to the pandemic have resulted in, and are expected to continue to
result in, a substantial curtailment of business activities, weakened economic conditions, significant economic uncertainty
and volatility. The pandemic is significantly adversely impacting and could in the future materially adversely impact our
business, operations and financial results.
The extent to which the coronavirus pandemic will continue to impact our business, operations and financial results will
depend on numerous evolving factors that are difficult to accurately predict, including: the duration and scope of the
pandemic and the continuation of additional outbreaks; how quickly and to what extent normal economic and social activity
can resume; the timing of the development and distribution of an effective vaccine or treatments for COVID-19; government,
business and individuals’ actions in response to the pandemic; the prolonged effect on our clients and client demand for our
services and solutions; the degree to which client demand normalizes in a remote work environment; the reprioritization,
delay or termination of existing client engagements; the ability of our clients to pay for our services and solutions. The
closures of our and our clients’ offices, and restrictions inhibiting our people’s ability to access those offices, have disrupted,
and will continue to disrupt our ability to sell and provide our services and have resulted in, and may continue to result in,
losses of revenue.
In response to governmental directives and recommended safety measures, we have enabled most of our employees to
work remotely. As governments ease their restrictions, our employees will likely increase their social interactions, including in
certain circumstances in our and our clients’ offices, which could increase the risk of infection and could result in increased
illness among our employees and associated risks, including business interruption.
Any of these events could cause, contribute to or magnify the other risks and uncertainties enumerated below and could
materially adversely affect our business, financial condition, results of operations and/or stock price.
Our results of operations have been, and may in the future be, adversely affected by volatile,
negative or uncertain economic and political conditions and the effects of these conditions on
our clients’ businesses and levels of business activity.
Global macroeconomic and geopolitical conditions affect our clients’ businesses and the markets they serve. Economic and
political conditions have become increasingly volatile, negative and uncertain due to the coronavirus pandemic, among other
reasons, and have undermined business confidence in our significant markets and other markets, which are increasingly
interdependent, caused our clients to reduce or defer their spending on new initiatives and technologies, and resulted in
clients reducing, delaying or eliminating spending under existing contracts with us, which has, and may continue to,
negatively affect our business. Growth in the markets we serve could be at a slow rate, or could stagnate or contract, in each
case, for an extended period of time. Because we operate globally and have significant businesses in many markets, an
economic slowdown in any of those markets could adversely affect our results of operations.
Ongoing economic and political volatility and uncertainty and changing demand patterns affect our business in a number of
other ways, including making it more difficult to accurately forecast client demand and effectively build our revenue and
resource plans, particularly in consulting. Economic and political volatility and uncertainty is particularly challenging because
it may take some time for the effects and changes in demand patterns resulting from these and other factors to manifest
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themselves in our business and results of operations. Changing demand patterns from economic and political volatility and
uncertainty, including as a result of the COVID-19 pandemic, changes in global trade policies, increasing geopolitical
tensions and trends such as populism and economic nationalism, elections in our major markets and their impact on us, our
clients and the industries we serve, could continue to have a significant negative impact on our results of operations.
Our business depends on generating and maintaining ongoing, profitable client demand for
our services and solutions, including through the adaptation and expansion of our services
and solutions in response to ongoing changes in technology and offerings, and a significant
reduction in such demand or an inability to respond to the evolving technological environment
could materially affect our results of operations.
Our revenue and profitability depend on the demand for our services and solutions with favorable margins, which could be
negatively affected by numerous factors, many of which are beyond our control and unrelated to our work product. As
described above, volatile, negative or uncertain global economic and political conditions and lower growth or contraction in
the markets we serve have adversely affected and could in the future adversely affect client demand for our services and
solutions. Our success depends, in part, on our ability to continue to develop and implement services and solutions that
anticipate and respond to rapid and continuing changes in technology and offerings to serve the evolving needs of our
clients. Examples of areas of significant change include digital-, cloud- and security-related offerings, which are continually
evolving, as well as developments in areas such as artificial intelligence, augmented reality, automation, blockchain, Internet
of Things, quantum and edge computing and as-a-service solutions. Technological developments may materially affect the
cost and use of technology by our clients and, in the case of as-a-service solutions, could affect the nature of how we
generate revenue. Some of these technological developments have reduced and replaced some of our historical services
and solutions and may continue to do so in the future. This has caused, and may in the future cause, clients to delay
spending under existing contracts and engagements and to delay entering into new contracts while they evaluate new
technologies. Such technological developments and spending delays can negatively impact our results of operations if we
are unable to introduce new pricing or commercial models that reflect the value of these technological developments or if the
pace and level of spending on new technologies are not sufficient to make up any shortfall.
Developments in the industries we serve, which may be rapid, also could shift demand to new services and solutions. If, as a
result of new technologies or changes in the industries we serve, our clients demand new services and solutions, we may be
less competitive in these new areas or need to make significant investment to meet that demand. Our growth strategy
focuses on responding to these types of developments by driving innovation that will enable us to expand our business into
new growth areas. If we do not sufficiently invest in new technology and adapt to industry developments, or evolve and
expand our business at sufficient speed and scale, or if we do not make the right strategic investments to respond to these
developments and successfully drive innovation, our services and solutions, our results of operations, and our ability to
develop and maintain a competitive advantage and to execute on our growth strategy could be adversely affected.
We operate in a rapidly evolving environment in which there currently are, and we expect will continue to be, new technology
entrants. New services or technologies offered by competitors or new entrants may make our offerings less differentiated or
less competitive when compared to other alternatives, which may adversely affect our results of operations. In addition,
companies in the industries we serve sometimes seek to achieve economies of scale and other synergies by combining with
or acquiring other companies. If one of our current clients merges or consolidates with a company that relies on another
provider for the services and solutions we offer, we may lose work from that client or lose the opportunity to gain additional
work if we are not successful in generating new opportunities from the merger or consolidation. In a particular geographic
market, service or industry group, a small number of clients have contributed, or may, in the future contribute, a significant
portion of the revenues of such geographic market, service or industry group, and any decision by such a client to delay,
reduce, or eliminate spending on our services and solutions could have a disproportionate impact on the results of
operations in the relevant geographic market, service or industry group.
Many of our consulting contracts are less than 12 months in duration, and these contracts typically permit a client to
terminate the agreement with as little as 30 days’ notice. Longer-term, larger and more complex contracts, such as the
majority of our outsourcing contracts, generally require a longer notice period for termination and often include an early
termination charge to be paid to us, but this charge might not be sufficient to cover our costs or make up for anticipated
ongoing revenues and profits lost upon termination of the contract. Many of our contracts allow clients to terminate, delay,
reduce or eliminate spending on the services and solutions we provide. Additionally, a client could choose not to retain us for
additional stages of a project, try to renegotiate the terms of its contract or cancel or delay additional planned work. When
contracts are terminated or not renewed, we lose the anticipated revenues, and it may take significant time to replace the
level of revenues lost. Consequently, our results of operations in subsequent periods could be materially lower than
expected. The specific business or financial condition of a client, changes in management and changes in a client’s strategy
are also all factors that can result in terminations, cancellations or delays.
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If we are unable to keep our supply of skills and resources in balance with client demand
around the world and attract and retain professionals with strong leadership skills, our
business, the utilization rate of our professionals and our results of operations may be
materially adversely affected.
Our success is dependent, in large part, on our ability to keep our supply of market-leading skills and capabilities in balance
with client demand around the world and our ability to attract and retain personnel with the knowledge and skills to lead our
business globally. We must hire or reskill, retain and motivate appropriate numbers of talented people with diverse skills in
order to serve clients across the globe, respond quickly to rapid and ongoing changes in technology, industry and the
macroeconomic environment, and continuously innovate to grow our business. For example, if we are unable to hire or
retrain our employees to keep pace with the rapid and continuous changes in technology and the industries we serve, we
may not be able to innovate and deliver new services and solutions to fulfill client demand. There is intense competition for
scarce talent with market-leading skills and capabilities in new technologies, and our competitors have directly targeted our
employees with these highly sought-after skills and will likely continue to do so. As a result, we may be unable to cost-
effectively hire and retain employees with these market-leading skills, which may cause us to incur increased costs, or be
unable to fulfill client demand for our services and solutions.
We are particularly dependent on retaining members of Accenture Leadership with critical capabilities. If we are unable to do
so, our ability to innovate, generate new business opportunities and effectively lead large and complex transformations and
client relationships could be jeopardized. We depend on identifying, developing and retaining top talent to innovate and lead
our businesses. This includes developing talent and leadership capabilities in emerging markets, where the depth of skilled
employees may be limited, and competition for these resources is intense. Our ability to expand in our key markets depends,
in large part, on our ability to attract, develop, retain and integrate both leaders for the local business and people with critical
capabilities.
Similarly, our profitability depends on our ability to effectively source and staff people with the right mix of skills and
experience to perform services for our clients, including our ability to transition employees to new assignments on a timely
basis. If we are unable to effectively deploy our employees globally and remotely on a timely basis to fulfill the needs of our
clients, our profitability could suffer. For example, we have experienced reduced demand for strategy and consulting services
during the COVID-19 pandemic and have staffed employees from these practices on projects where we are experiencing
strong client demand. If we are unable to retain our top talent with these skills, we may experience difficulty staffing these
engagements when demand for these services rebounds. If our utilization rate is too low, our profitability and the
engagement of our employees could suffer. If the utilization rate of our professionals is too high, it could have an adverse
effect on employee engagement and attrition, the quality of the work performed as well as our ability to staff projects. The
costs associated with recruiting and training employees are significant. An important element of our global business model is
the deployment of our employees around the world, which allows us to move talent as needed. Therefore, if we are not able
to deploy the talent we need because of COVID-19 travel restrictions or increased regulation of immigration or work visas,
including limitations placed on the number of visas granted, limitations on the type of work performed or location in which the
work can be performed, and new or higher minimum salary requirements, it could be more difficult to staff our employees on
client engagements and could increase our costs.
Our equity-based incentive compensation plans are designed to reward high-performing individuals for their contributions
and provide incentives for them to remain with us. If the anticipated value of such incentives does not materialize because of
volatility or lack of positive performance in our stock price, or if our total compensation package is not viewed as being
competitive, our ability to attract and retain the personnel we need could be adversely affected. In addition, if we do not
obtain the shareholder approval needed to continue granting equity awards under our share plans in the amounts we believe
are necessary, our ability to attract and retain personnel could be negatively affected.
There is a risk that at certain points in time, we may have more personnel than we need in certain skill sets or geographies or
at compensation levels that are not aligned with skill sets. In these situations, we have engaged, and may in the future
engage, in actions to rebalance our resources, including reducing the rate of new hires and increasing involuntary
terminations as a means to keep our supply of skills and resources in balance with client demand. In fiscal 2020, we
accelerated our usual level of performance-related involuntary terminations that would have otherwise occurred throughout
fiscal 2021. At certain times and in certain geographical regions, we will find it difficult to hire and retain a sufficient number of
employees with the skills or backgrounds to meet current and/or future demand. In these cases, we might need to redeploy
existing personnel or increase our reliance on subcontractors to fill certain labor needs, and if not done effectively, our
profitability could be negatively impacted. Additionally, if demand for our services and solutions were to escalate at a high
rate, we may need to adjust our compensation practices, which could put upward pressure on our costs and adversely affect
our profitability if we are unable to recover these increased costs. If we are not successful in these initiatives, our results of
operations could be adversely affected.
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We could face legal, reputational and financial risks if we fail to protect client and/or Accenture
data from security incidents or cyberattacks.
We are dependent on information technology networks and systems to securely process, transmit and store electronic
information and to communicate among our locations around the world and with our people, clients, alliance partners and
vendors. As the breadth and complexity of this infrastructure continues to grow, including as a result of the increasing
reliance on, and use of, mobile technologies, social media and cloud-based services, and as more of our employees are
working remotely during the coronavirus pandemic, the risk of security incidents and cyberattacks increases. Such incidents
could lead to shutdowns or disruptions of or damage to our systems and those of our clients, alliance partners and vendors,
and unauthorized disclosure of sensitive or confidential information, including personal data and proprietary business
information. In the past, we have experienced data security incidents resulting from unauthorized access to our and our
service providers’ systems and unauthorized acquisition of our data and our clients’ data including: inadvertent disclosure,
misconfiguration of systems, phishing attacks and ransomware attacks. In addition, our clients have experienced, and may in
the future experience, breaches of systems and cloud-based services enabled by or provided by us. To date these incidents
have not had a material impact on our operations; however, there is no assurance that such impacts will not be material in
the future.
In providing services and solutions to clients, we often manage, utilize and store sensitive or confidential client or Accenture
data, including personal data and proprietary information, and we expect these activities to increase, including through the
use of artificial intelligence, the Internet of Things and analytics. Unauthorized disclosure of, denial of access to, or other
incidents involving sensitive or confidential client, vendor, alliance partner or Accenture data, whether through systems
failure, employee negligence, fraud, misappropriation, cybersecurity or ransomware attacks, or other intentional or
unintentional acts, could damage our reputation, cause us to lose clients and result in significant financial exposure and legal
liability. Similarly, unauthorized access to or through, denial of access to, or other incidents involving, our or our service
providers’ information systems or those we develop for our clients, whether by our employees or third parties, including a
cyberattack by computer programmers, hackers, members of organized crime and/or state-sponsored organizations, who
continuously develop and deploy viruses, ransomware or other malicious software programs or social engineering attacks,
could result in negative publicity, significant remediation costs, legal liability, damage to our reputation and government
sanctions and could have a material adverse effect on our results of operations — see risk factor below entitled “Our
business could be materially adversely affected if we incur legal liability.” Cybersecurity threats are constantly expanding and
evolving, thereby increasing the difficulty of detecting and defending against them and maintaining effective security
measures and protocols.
We are subject to numerous laws and regulations designed to protect this information, such as the European Union’s
General Data Protection Regulation (“GDPR”), the California Consumer Privacy Act, various other U.S. federal and state
laws governing the protection of health or other personally identifiable information and data privacy and cybersecurity laws in
other regions. These laws and regulations continue to evolve, are increasing in complexity and number and increasingly
conflict among the various countries in which we operate, which has resulted in greater compliance risk and cost for us. The
GDPR imposes compliance obligations regarding the handling of personal data and significant financial penalties for
noncompliance. For example, failure to comply with the GDPR may lead to regulatory enforcement actions, which can result
in monetary penalties of up to 4% of worldwide revenue, orders to discontinue certain data processing operations, private
lawsuits, or reputational damage. If any person, including any of our employees, negligently disregards or intentionally
breaches our established controls with respect to client or Accenture data, or otherwise mismanages or misappropriates that
data, we could be subject to significant litigation, monetary damages, regulatory enforcement actions, fines and/or criminal
prosecution in one or more jurisdictions. These monetary damages might not be subject to a contractual limit of liability or an
exclusion of consequential or indirect damages and could be significant. In addition, our liability insurance, which includes
cyber insurance, might not be sufficient in type or amount to cover us against claims related to security incidents,
cyberattacks and other related incidents.
The markets in which we operate are highly competitive, and we might not be able to compete
effectively.
The markets in which we offer our services and solutions are highly competitive. Our competitors include:
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large multinational IT service providers, including the services arms of large global technology providers;
off-shore IT service providers in lower-cost locations, particularly in India;
accounting firms that provide consulting and other IT services and solutions;
solution or service providers that compete with us in a specific geographic market, industry or service area, including
advertising agencies and technology start-ups and other companies that can scale rapidly to focus on or disrupt certain
markets and provide new or alternative products, services or delivery models; and
in-house IT departments of large corporations that use their own resources, rather than engage an outside firm.
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Some competitors may have greater financial, marketing or other resources than we do and, therefore, may be better able to
compete for new work and skilled professionals, may be able to innovate and provide new services and solutions faster than
we can or may be able to anticipate the need for services and solutions before we do. Our competitors may also team
together to create competing offerings.
Even if we have potential offerings that address marketplace or client needs, competitors may be more successful at selling
similar services they offer, including to companies that are our clients. Some competitors are more established in certain
markets, and that may make executing our growth strategy to expand in these markets more challenging. Additionally,
competitors may also offer more aggressive contractual terms, which may affect our ability to win work. Our future
performance is largely dependent on our ability to compete successfully and expand in the markets we currently serve. If we
are unable to compete successfully, we could lose market share and clients to competitors, which could materially adversely
affect our results of operations.
In addition, we may face greater competition due to consolidation of companies in the technology sector through strategic
mergers, acquisitions or teaming arrangements. Consolidation activity may result in new competitors with greater scale, a
broader footprint or offerings that are more attractive than ours. Over time, our access to certain technology products and
services may be reduced as a result of this consolidation. The technology companies described above, including many of our
alliance partners, are increasingly able to offer services related to their software, platform, cloud migration and other
solutions, or are developing software, platform, cloud migration and other solutions that require integration services to a
lesser extent. These more integrated services and solutions may represent more attractive alternatives to clients than some
of our services and solutions, which may materially adversely affect our competitive position and our results of operations.
Our profitability could materially suffer if we are unable to obtain favorable pricing for our
services and solutions, if we are unable to remain competitive, if our cost-management
strategies are unsuccessful or if we experience delivery inefficiencies or fail to satisfy certain
agreed-upon targets or specific service levels.
Our profitability is highly dependent on a variety of factors and could be materially impacted by any of the following:
Our results of operations could materially suffer if we are not able to obtain sufficient pricing to meet our
profitability expectations. If we are not able to obtain favorable pricing for our services and solutions, our revenues and
profitability could materially suffer. The rates we are able to charge for our services and solutions are affected by a number of
factors, including:
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general economic and political conditions;
our clients’ desire to reduce their costs;
the competitive environment in our industry;
our ability to accurately estimate our service delivery costs, upon which our pricing is sometimes determined, includes
our ability to estimate the impact of inflation and foreign exchange on our service delivery costs over long-term
contracts; and
the procurement practices of clients and their use of third-party advisors.
Our profitability could suffer if we are not able to remain competitive. The competitive environment in our industry
affects our ability to secure new contracts at our target economics in a number of ways, any of which could have a material
negative impact on our results of operations. The less we are able to differentiate our services and solutions and/or clearly
convey the value of our services and solutions, the more risk we have in winning new work in sufficient volumes and at our
target pricing and overall economics. In addition, the introduction of new services or products by competitors could reduce
our ability to obtain favorable pricing and impact our overall economics for the services or solutions we offer. Competitors
may be willing, at times, to price contracts lower than us in an effort to enter the market or increase market share.
Our profitability could suffer if our cost-management strategies are unsuccessful, and we may not be able to
improve our profitability. Our ability to improve or maintain our profitability is dependent on our being able to successfully
manage our costs, including taking actions to reduce certain costs. Our cost management strategies include maintaining
appropriate alignment between the demand for our services and solutions and the workforce needed to deliver them. If we
are not effective in managing our operating costs in response to changes in demand or pricing, or if we are unable to cost-
effectively hire and retain personnel with the knowledge and skills necessary to deliver our services and solutions,
particularly in areas of new technologies and offerings and in the right geographic locations, we may incur increased costs,
which could reduce our ability to continue to invest in our business in an amount necessary to achieve our planned rates of
growth and our desired levels of profitability.
If we do not accurately anticipate the cost, risk and complexity of performing our work or if third parties upon whom
we rely do not meet their commitments, then our contracts could have delivery inefficiencies and be less profitable
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than expected or unprofitable. Our contract profitability is highly dependent on our forecasts regarding the effort and cost
necessary to deliver our services and solutions, which are based on available data and could turn out to be materially
inaccurate. If we do not accurately estimate the effort, costs or timing for meeting our contractual commitments and/or
completing engagements to a client’s satisfaction, our contracts could yield lower profit margins than planned or be
unprofitable. Moreover, many of our contracts include clauses that tie our ultimate compensation to the achievement of
agreed-upon performance standards or milestones. If we fail to satisfy these measures, it could significantly reduce or
eliminate our fees under the contracts, increase the cost to us of meeting performance standards or milestones, delay
expected payments or subject us to potential damage claims under the contract terms, any of which could significantly affect
our profitability. We also have a number of contracts in which a portion of our compensation depends on performance
measures such as cost-savings, revenue enhancement, benefits produced, business goals attained and adherence to
schedule. These goals can be complex and may depend on our clients’ actual levels of business activity or may be based on
assumptions that are later determined not to be achievable or accurate and could negatively impact our profit margins if not
achieved. Similarly, if we experience unanticipated delivery difficulties due to our management, the failure of third parties or
our clients to meet their commitments, or for any other reason, our contracts could yield lower profit margins than planned or
be unprofitable. In particular, large and complex arrangements often require that we utilize subcontractors or that our
services and solutions incorporate or coordinate with the software, systems or infrastructure requirements of other vendors
and service providers, including companies with which we have alliances. Our profitability depends on the ability of these
subcontractors, vendors and service providers to deliver their products and services in a timely manner and in accordance
with the project requirements, as well as on our effective oversight of their performance. In some cases, these subcontractors
are small firms, and they might not have the resources or experience to successfully integrate their services or products with
large-scale engagements or enterprises. Some of this work involves new technologies, which may not work as intended or
may take more effort to implement than initially predicted. In addition, certain client work requires the use of unique and
complex structures and alliances, some of which require us to assume responsibility for the performance of third parties
whom we do not control. Any of these factors could adversely affect our ability to perform and subject us to additional
liabilities, which could have a material adverse effect on our relationships with clients and on our results of operations.
Changes in our level of taxes, as well as audits, investigations and tax proceedings, or
changes in tax laws or in their interpretation or enforcement, could have a material adverse
effect on our effective tax rate, results of operations, cash flows and financial condition.
We are subject to taxes in numerous jurisdictions. We calculate and provide for taxes in each tax jurisdiction in which we
operate. Tax accounting often involves complex matters and requires our judgment to determine our worldwide provision for
income taxes and other tax liabilities. We are subject to ongoing audits, investigations and tax proceedings in various
jurisdictions. Tax authorities have disagreed, and may in the future disagree, with our judgments, and are taking increasingly
aggressive positions opposing the judgments we make, including with respect to our intercompany transactions. We regularly
assess the likely outcomes of our audits, investigations and tax proceedings to determine the appropriateness of our tax
liabilities. However, our judgments might not be sustained as a result of these audits, investigations and tax proceedings, and
the amounts ultimately paid could be materially different from the amounts previously recorded.
In addition, our effective tax rate in the future could be adversely affected by challenges to our intercompany transactions,
changes in the valuation of deferred tax assets and liabilities and changes in tax laws or in their interpretation or
enforcement, changes in the mix of earnings in countries with differing statutory tax rates, the expiration of current tax
benefits and changes in accounting principles, including the U.S. generally accepted accounting principles. Tax rates in the
jurisdictions in which we operate may change materially as a result of shifting economic and political conditions and tax
policies. In addition, changes in tax laws, treaties or regulations, or their interpretation or enforcement, have become more
unpredictable and may become more stringent, which could materially adversely affect our tax position. A number of
countries where we do business, including the United States and many countries in the European Union, have implemented,
and are considering implementing, changes in relevant tax, accounting and other laws, regulations and interpretations.
The overall tax environment has made it increasingly challenging for multinational corporations to operate with certainty
about taxation in many jurisdictions. For example, the European Commission has been conducting investigations, focusing
on whether local country tax rulings or tax legislation provide preferential tax treatment that violates European Union state aid
rules. Furthermore, the Organization for Economic Co-operation and Development (“OECD”), which represents a coalition of
member countries, is supporting changes to numerous long-standing tax principles through its base erosion and profit
shifting project, which is focused on a number of issues, including the shifting of profits among affiliated entities located in
different tax jurisdictions. The changes recommended by the OECD have been or are being adopted by many of the
countries in which we do business. In addition, the European Commission has expanded upon the OECD guidelines with
anti-tax avoidance directives to be applied by its member states. Among other things, the directives require companies to
provide increased country-by-country disclosure of their financial information to tax authorities, which in turn could lead to
disagreements by jurisdictions over the proper allocation of profits between them. In connection with the OECD’s base
erosion and profit shifting project, the OECD has undertaken a new project focused on “Addressing the Tax Challenges of the
Digitalization of the Economy.” This project may impact all multinational businesses by implementing a global model for
minimum taxation. Additionally, the European Commission and some foreign jurisdictions have introduced proposals to
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impose a separate tax on specified digital service activity. There is significant uncertainty regarding such proposals. The
increasingly complex global tax environment, and any unfavorable resolution of these uncertainties, could have a material
adverse effect on our effective tax rate, results of operations, cash flows and financial condition.
Although we expect to be able to rely on the tax treaty between the United States and Ireland, legislative or diplomatic action
could be taken, or the treaty may be amended in such a way, that would prevent us from being able to rely on such treaty.
Our inability to rely on the treaty would subject us to increased taxation or significant additional expense. In addition,
congressional proposals could change the definition of a U.S. person for U.S. federal income tax purposes, which could also
subject us to increased taxation. In addition, we could be materially adversely affected by future changes in tax law or policy
(or in their interpretation or enforcement) in Ireland or other jurisdictions where we operate, including their treaties with
Ireland or the United States. These changes could be exacerbated by economic, budget or other challenges facing Ireland or
these other jurisdictions.
Our ability to attract and retain business and employees may depend on our reputation in the
marketplace.
We believe the Accenture brand name and our reputation are important corporate assets that help distinguish our services
and solutions from those of competitors and also contribute to our efforts to recruit and retain talented employees. However,
our corporate reputation is potentially susceptible to material damage by events such as disputes with clients, competitors,
cybersecurity incidents or service outages, internal control deficiencies, delivery failures, compliance violations, government
investigations or legal proceedings. We may also experience reputational damage from employees, advocacy groups,
regulators, investors and other stakeholders that disagree with the services and solutions that we offer, or the clients that we
serve. Similarly, our reputation could be damaged by actions or statements of current or former clients, directors, employees,
competitors, vendors, alliance partners, joint venture partners, adversaries in legal proceedings, legislators or government
regulators, as well as members of the investment community or the media, including social media influencers. There is a risk
that negative or inaccurate information about Accenture, even if based on rumor or misunderstanding, could adversely affect
our business. Damage to our reputation could be difficult, expensive and time-consuming to repair, could make potential or
existing clients reluctant to select us for new engagements, resulting in a loss of business, and could adversely affect our
recruitment and retention efforts. Damage to our reputation could also reduce the value and effectiveness of the Accenture
brand name and could reduce investor confidence in us, materially adversely affecting our share price.
As a result of our geographically diverse operations and our growth strategy to continue to
expand in our key markets around the world, we are more susceptible to certain risks.
We have offices and operations in more than 200 cities in 50 countries around the world. One aspect of our growth strategy
is to continue to expand in our key markets around the world. Our growth strategy might not be successful. If we are unable
to manage the risks of our global operations and growth strategy, including pandemics, international hostilities, terrorist
activities, natural disasters and security or data incidents, the concentration of our global delivery capability in India and the
Philippines, failure to maintain compliance with our clients’ control requirements and multiple legal and regulatory systems,
our results of operations and ability to grow could be materially adversely affected. In addition, emerging markets generally
involve greater financial and operational risks, such as those described below, than our more mature markets. Negative or
uncertain political climates in countries or geographies where we operate could also adversely affect us.
Pandemics, international hostilities, terrorist activities, natural disasters, and infrastructure disruptions could
prevent us from effectively serving our clients and thus significantly adversely affect our results of operations.
Health emergencies or pandemics, including COVID-19; acts of terrorist violence; political and social unrest; regional and
international hostilities and international responses to these hostilities; natural disasters, volcanic eruptions, sea level rise,
floods, droughts and the increasing frequency and severity of adverse weather conditions; or the threat of or perceived
potential for these events; and other acts of god have had and could in the future have significantly negative impacts on us.
These events could adversely affect our clients’ levels of business activity and precipitate sudden and significant changes in
regional and global economic conditions and cycles. These events also pose significant risks to our people and to physical
facilities and operations around the world, whether the facilities are ours or those of our alliance partners, suppliers or clients.
By disrupting communications and travel and increasing the difficulty of obtaining and retaining highly skilled and qualified
personnel, these types of events impact our ability to deliver our services and solutions to our clients. Extended disruptions
of electricity, other public utilities or network services at our facilities or in the areas where our people are working remotely,
as well as physical infrastructure damage to, system failures at, cyberattacks on, or security incidents involving, our facilities
or systems, or those of our alliance partners, suppliers or clients, could also adversely affect our ability to conduct our
business and serve our clients. If any of these circumstances occurs, we have a greater risk that interruptions in
communications with our clients and other Accenture locations and personnel, and any down-time in important processes we
operate for clients, could result in a material adverse effect on our results of operations and our reputation in the
marketplace.
We are unable to protect our people, facilities and systems, and those of our alliance partners, suppliers and clients, against
all such occurrences. Our business continuity and disaster recovery plans may not be effective, particularly if catastrophic
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events occur where large numbers of our people are located, or simultaneously affect our people in multiple locations around
the world. We generally do not have insurance for losses and interruptions caused by terrorist attacks, conflicts and wars. If
these disruptions prevent us from effectively serving our clients, our results of operations could be significantly adversely
affected.
Our global delivery capability is concentrated in India and the Philippines, which may expose us to operational
risks. Our business model is dependent on our global delivery capability. While our delivery centers are located
throughout the world, we have based large portions of our delivery capability in India, and the Philippines, where we have the
largest and second largest number of our people located, respectively. Concentrating our global delivery capability in these
locations presents a number of operational risks, including those discussed in this risk factor, many of which are beyond our
control and which may be exacerbated by COVID-19.
We could be subject to strict restrictions on the movement of cash and the exchange of foreign currencies. In some
countries, we could be subject to strict restrictions on the movement of cash and the exchange of foreign currencies, which
would limit our ability to use this cash across our global operations and expose us to more extreme currency fluctuations.
This risk could increase as we continue to expand in our key markets around the world, which include emerging markets that
are more likely to impose these restrictions than more established markets.
Our global operations expose us to numerous and sometimes conflicting legal and regulatory requirements, and
violation of these regulations could harm our business. We are subject to numerous, and sometimes conflicting, legal
regimes on matters as diverse as anticorruption, import/export controls, content requirements, trade restrictions, tariffs,
taxation, sanctions, immigration, internal and disclosure control obligations, securities regulation, anti-competition, anti-
money-laundering, data privacy and protection, government compliance, wage-and-hour standards, employment and labor
relations and human rights. The global nature of our operations, including emerging markets where legal systems may be
less developed or understood by us, and the diverse nature of our operations across a number of regulated industries,
further increase the difficulty of compliance. Compliance with diverse legal requirements is costly, time-consuming and
requires significant resources. Violations of one or more of these regulations in the conduct of our business could result in
significant fines, enforcement actions or criminal sanctions against us and/or our employees, prohibitions on doing business
and damage to our reputation. Violations of these regulations in connection with the performance of our obligations to our
clients also could result in liability for significant monetary damages, fines, enforcement actions and/or criminal prosecution
or sanctions, unfavorable publicity and other reputational damage and restrictions on our ability to effectively carry out our
contractual obligations and thereby expose us to potential claims from our clients. Due to the varying degrees of
development of the legal systems of the countries in which we operate, local laws may not be well developed or provide
sufficiently clear guidance and may be insufficient to protect our rights.
In particular, in many parts of the world, including countries in which we operate and/or seek to expand, practices in the local
business community might not conform to international business standards and could violate anticorruption laws, or
regulations, including the U.S. Foreign Corrupt Practices Act and the UK Bribery Act 2010. Our employees, subcontractors,
vendors, agents, alliance or joint venture partners, the companies we acquire and their employees, subcontractors, vendors
and agents, and other third parties with which we associate, could take actions that violate policies or procedures designed
to promote legal and regulatory compliance or applicable anticorruption laws or regulations. Violations of these laws or
regulations by us, our employees or any of these third parties could subject us to criminal or civil enforcement actions
(whether or not we participated or knew about the actions leading to the violations), including fines or penalties,
disgorgement of profits and suspension or disqualification from work, including U.S. federal contracting, any of which could
materially adversely affect our business, including our results of operations and our reputation.
Changes in laws and regulations could also mandate significant and costly changes to the way we implement our services
and solutions or could impose additional taxes on our services and solutions. For example, changes in laws and regulations
to limit using off-shore resources in connection with our work or to penalize companies that use off-shore resources, which
have been proposed from time to time in various jurisdictions, could adversely affect our results of operations. Such changes
may result in contracts being terminated or work being transferred onshore, resulting in greater costs to us, and could have a
negative impact on our ability to obtain future work from government clients.
Our business could be materially adversely affected if we incur legal liability.
We are subject to, and may become a party to, a variety of litigation or other claims and suits that arise from time to time in
the ordinary course of our business. Our business is subject to the risk of litigation involving current and former employees,
clients, alliance partners, subcontractors, suppliers, competitors, shareholders, government agencies or others through
private actions, class actions, whistleblower claims, administrative proceedings, regulatory actions or other litigation.
Regardless of the merits of the claims, the cost to defend current and future litigation may be significant, and such matters
can be time-consuming and divert management’s attention and resources. The results of litigation and other legal
proceedings are inherently uncertain, and adverse judgments or settlements in some or all of these legal disputes may result
in materially adverse monetary damages, fines, penalties or injunctive relief against us. Any claims or litigation, even if fully
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indemnified or insured, could damage our reputation and make it more difficult to compete effectively or to obtain adequate
insurance in the future.
We could be subject to significant legal liability and litigation expense if we fail to meet our contractual obligations, contribute
to internal control or other deficiencies of a client or otherwise breach obligations to third parties, including clients, alliance
partners, employees and former employees, and other parties with whom we conduct business, or if our subcontractors
breach or dispute the terms of our agreements with them and impede our ability to meet our obligations to our clients. For
example, by taking over the operation of certain portions of our clients’ businesses, including functions and systems that are
critical to the core businesses of our clients, we may be exposed to additional and evolving operational, regulatory,
reputational or other risks specific to these areas, including risks related to data security. A failure of a client’s system based
on our services or solutions could also subject us to a claim for significant damages that could materially adversely affect our
results of operations. We may enter into agreements with non-standard terms because we perceive an important economic
opportunity or because our personnel did not adequately follow our contracting guidelines. In addition, the contracting
practices of competitors, along with the demands of increasingly sophisticated clients, may cause contract terms and
conditions that are unfavorable to us to become new standards in the industry. We may commit to providing services or
solutions that we are unable to deliver or whose delivery may reduce our profitability or cause us financial loss. If we cannot
or do not meet our contractual obligations and if our potential liability is not adequately limited through the terms of our
agreements, liability limitations are not enforced or a third party alleges fraud or other wrongdoing to prevent us from relying
upon those contractual protections, we might face significant legal liability and litigation expense and our results of operations
could be materially adversely affected. Moreover, as we expand our services and solutions into new areas, we may be
exposed to additional and evolving risks specific to these new areas.
In addition, we engage in platform trust and safety services on behalf of clients, including content moderation, which could
have a negative impact on our employees due to the nature of the materials they review. We have been subject to media
coverage regarding our provision of these services as well as litigation related to the provision of these services, which may
result in adverse judgments or settlements.
While we maintain insurance for certain potential liabilities, such insurance does not cover all types and amounts of potential
liabilities and is subject to various exclusions as well as caps on amounts recoverable. Even if we believe a claim is covered
by insurance, insurers may dispute our entitlement to recovery for a variety of potential reasons, which may affect the timing
and, if they prevail, the amount of our recovery.
Our work with government clients exposes us to additional risks inherent in the government
contracting environment.
Our clients include national, provincial, state and local governmental entities. Our government work carries various risks
inherent in the government contracting process. These risks include, but are not limited to, the following:
•
•
•
Government entities, particularly in the United States, often reserve the right to audit our contract costs and conduct
inquiries and investigations of our business practices and compliance with government contract requirements. U.S.
government agencies, including the Defense Contract Audit Agency, routinely audit our contract costs, including
allocated indirect costs, for compliance with the Cost Accounting Standards and the Federal Acquisition Regulation.
These agencies also conduct reviews and investigations and make inquiries regarding our accounting, information
technology and other systems in connection with our performance and business practices with respect to our
government contracts. Negative findings from existing and future audits, investigations or inquiries, or failure to comply
with applicable IT security requirements, could affect our future sales and profitability by preventing us, by operation of
law or in practice, from receiving new government contracts for some period of time. In addition, if the U.S. government
concludes that certain costs are not reimbursable, have not been properly determined or are based on outdated
estimates of our work, then we will not be allowed to bill for such costs, may have to refund money that has already
been paid to us or could be required to retroactively and prospectively adjust previously agreed to billing or pricing rates
for our work. Negative findings from existing and future audits of our business systems, including our accounting system,
may result in the U.S. government preventing us from billing, at least temporarily, a percentage of our costs. As a result
of prior negative findings in connection with audits, investigations and inquiries, we have from time to time experienced
some of the adverse consequences described above and may in the future experience further adverse consequences,
which could materially adversely affect our future results of operations.
If a government client discovers improper or illegal activities in the course of audits or investigations, we may become
subject to various civil and criminal penalties, including those under the civil U.S. False Claims Act, and administrative
sanctions, which may include termination of contracts, forfeiture of profits, suspension of payments, fines and
suspensions or debarment from doing business with other agencies of that government. The inherent limitations of
internal controls may not prevent or detect all improper or illegal activities.
U.S. government contracting regulations impose strict compliance and disclosure obligations. Disclosure is required if
certain company personnel have knowledge of “credible evidence” of a violation of federal criminal laws involving fraud,
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Item 1A. Risk Factors
19
•
•
•
•
•
conflict of interest, bribery or improper gratuity, a violation of the civil U.S. False Claims Act or receipt of a significant
overpayment from the government. Failure to make required disclosures could be a basis for suspension and/or
debarment from federal government contracting in addition to breach of the specific contract and could also impact
contracting beyond the U.S. federal level. Reported matters also could lead to audits or investigations and other civil,
criminal or administrative sanctions.
Government contracts are subject to heightened reputational and contractual risks compared to contracts with
commercial clients. For example, government contracts and the proceedings surrounding them are often subject to more
extensive scrutiny and publicity. Negative publicity, including an allegation of improper or illegal activity, regardless of its
accuracy, may adversely affect our reputation.
Terms and conditions of government contracts also tend to be more onerous and are often more difficult to negotiate.
For example, these contracts often contain high or unlimited liability for breaches and feature less favorable payment
terms and sometimes require us to take on liability for the performance of third parties.
Government entities typically fund projects through appropriated monies. While these projects are often planned and
executed as multi-year projects, government entities usually reserve the right to change the scope of or terminate these
projects for lack of approved funding and/or at their convenience. Changes in government or political developments,
including budget deficits, shortfalls or uncertainties, government spending reductions or other debt constraints could
result in our projects being reduced in price or scope or terminated altogether, which also could limit our recovery of
incurred costs, reimbursable expenses and profits on work completed prior to the termination. Furthermore, if insufficient
funding is appropriated to the government entity to cover termination costs, we may not be able to fully recover our
investments.
Political and economic factors such as pending elections, the outcome of recent elections, changes in leadership among
key executive or legislative decision makers, revisions to governmental tax or other policies and reduced tax revenues
can affect the number and terms of new government contracts signed or the speed at which new contracts are signed,
decrease future levels of spending and authorizations for programs that we bid, shift spending priorities to programs in
areas for which we do not provide services and/or lead to changes in enforcement or how compliance with relevant rules
or laws is assessed.
Our ability to work for the U.S. government is impacted by the fact that we are an Irish company. We elected to enter into
a proxy agreement with the U.S. Department of Defense that enhances the ability of our U.S. federal government
contracting subsidiary to perform certain work for the U.S. government. The proxy agreement regulates the management
and operation of, and limits the control we can exercise over, this subsidiary. In addition, legislative and executive
proposals remain under consideration or could be proposed in the future, which, if enacted, could place additional
limitations on or even prohibit our eligibility to be awarded state or federal government contracts in the United States or
could include requirements that would otherwise affect our results of operations. Various U.S. federal and state
legislative proposals have been introduced and/or enacted in recent years that deny government contracts to certain
U.S. companies that reincorporate or have reincorporated outside the United States. While Accenture was not a U.S.
company that reincorporated outside the United States, it is possible that these contract bans and other legislative
proposals could be applied in a way that negatively affects Accenture.
The occurrences or conditions described above could affect not only our business with the particular government entities
involved, but also our business with other entities of the same or other governmental bodies or with certain commercial
clients, and could have a material adverse effect on our business or our results of operations.
Our results of operations could be materially adversely affected by fluctuations in foreign
currency exchange rates.
Although we report our results of operations in U.S. dollars, a majority of our revenues is denominated in currencies other
than the U.S. dollar. Unfavorable fluctuations in foreign currency exchange rates have had an adverse effect, and could in
the future have a material adverse effect, on our results of operations.
Because our consolidated financial statements are presented in U.S. dollars, we must translate revenues, expenses and
income, as well as assets and liabilities, into U.S. dollars at exchange rates in effect during or at the end of each reporting
period. Therefore, changes in the value of the U.S. dollar against other currencies will affect our revenues, operating income
and the value of balance-sheet items, including intercompany payables and receivables, originally denominated in other
currencies. These changes cause our growth stated in U.S. dollars to be higher or lower than our growth in local currency
when compared against other periods. Our currency hedging programs, which are designed to partially offset the impact on
consolidated earnings related to the changes in value of certain balance sheet items, might not be successful. Additionally,
some transactions and balances may be denominated in currencies for which there is no available market to hedge.
As we continue to leverage our global delivery model, more of our expenses are incurred in currencies other than those in
which we bill for the related services. An increase in the value of certain currencies, such as the Indian rupee or Philippine
peso, against the currencies in which our revenue is recorded could increase costs for delivery of services at off-shore sites
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Item 1A. Risk Factors
20
by increasing labor and other costs that are denominated in local currency. Our contractual provisions or cost management
efforts might not be able to offset their impact, and our currency hedging activities, which are designed to partially offset this
impact, might not be successful. This could result in a decrease in the profitability of our contracts that are utilizing delivery
center resources. In addition, our currency hedging activities are themselves subject to risk. These include risks related to
counterparty performance under hedging contracts, risks related to ineffective hedges and risks related to currency
fluctuations. We also face risks that extreme economic conditions, political instability, or hostilities or disasters of the type
described below could impact or perhaps eliminate the underlying exposures that we are hedging. Such an event could lead
to losses being recognized on the currency hedges then in place that are not offset by anticipated changes in the underlying
hedge exposure.
If we are unable to manage the organizational challenges associated with our size, we might be
unable to achieve our business objectives.
As of August 31, 2020, we had approximately 506,000 employees worldwide. Our size and scale present significant
management and organizational challenges. It might become increasingly difficult to maintain effective standards across a
large enterprise and effectively institutionalize our knowledge. It might also become more difficult to maintain our culture,
effectively manage and monitor our personnel and operations and effectively communicate our core values, policies and
procedures, strategies and goals, particularly given our world-wide operations. The size and scope of our operations
increase the possibility that we will have employees who engage in unlawful or fraudulent activity, or otherwise expose us to
unacceptable business risks, despite our efforts to train them and maintain internal controls to prevent such instances. For
example, employee misconduct could involve the improper use of sensitive or confidential information entrusted to us, or
obtained inappropriately, or the failure to comply with legislation or regulations regarding the protection of sensitive or
confidential information, including personal data and proprietary information. Furthermore, the inappropriate use of social
networking sites by our employees could result in breaches of confidentiality, unauthorized disclosure of non-public company
information or damage to our reputation. If we do not continue to develop and implement the right processes and tools to
manage our enterprise and instill our culture and core values into all of our employees, our ability to compete successfully
and achieve our business objectives could be impaired. In addition, effective March 1, 2020, we began managing our
business under a new growth model through our three geographic markets, which also became our reportable segments in
the third quarter of fiscal 2020. The change was designed to help us better serve our clients and continue to scale our
business. We may continue to make changes to our operating model as the needs and size of our business change, and if
we do not successfully implement the changes, our business and results of operation may be negatively impacted.
If we do not successfully manage and develop our relationships with key alliance partners or if
we fail to anticipate and establish new alliances in new technologies, our results of operations
could be adversely affected.
We have alliances with companies whose capabilities complement our own. A very significant portion of our revenue and
services and solutions are based on technology or software provided by a few major alliance partners. See “Business—
Services.”
The business that we conduct through these alliances could decrease or fail to grow for a variety of reasons. The priorities
and objectives of our alliance partners may differ from ours, and our alliance partners are not prohibited from competing with
us or forming closer or preferred arrangements with our competitors. In addition, some of our alliance partners are also large
clients or suppliers of technology to us. The decisions we make vis-à-vis an alliance partner may impact our ongoing alliance
relationship. In addition, our alliance partners could experience reduced demand for their technology or software, including,
for example, in response to changes in technology, which could lessen related demand for our services and solutions.
We must anticipate and respond to continuous changes in technology and develop alliance relationships with new providers
of relevant technology. We must secure meaningful alliances with these providers early in their life cycle so that we can
develop the right number of certified people with skills in new technologies. If we are unable to maintain our relationships with
current partners and identify new and emerging providers of relevant technology to expand our network of alliance partners,
we may not be able to differentiate our services or compete effectively in the market.
If we do not obtain the expected benefits from our alliance relationships for any reason, we may be less competitive, our
ability to offer attractive solutions to our clients may be negatively affected, and our results of operations could be adversely
affected.
We might not be successful at acquiring, investing in or integrating businesses, entering into
joint ventures or divesting businesses.
We expect to continue pursuing strategic acquisitions, investments and joint ventures to enhance or add to our skills and
capabilities or offerings of services and solutions, or to enable us to expand in certain geographic and other markets.
Depending on the opportunities available, we may increase the amount of capital invested in such opportunities. We may not
succeed in completing targeted transactions, including as a result of the market becoming increasingly competitive, or
achieve desired results of operations.
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Item 1A. Risk Factors
21
Furthermore, we face risks in successfully integrating any businesses we might acquire or create through a joint venture.
Ongoing business may be disrupted, and our management’s attention may be diverted by acquisition, investment, transition
or integration activities. In addition, we might need to dedicate additional management and other resources, and our
organizational structure could make it difficult for us to efficiently integrate acquired businesses into our ongoing operations
and assimilate and retain employees of those businesses into our culture and operations. The loss of key executives,
employees, customers, suppliers, vendors and other business partners of businesses we acquire may adversely impact the
value of the assets, operations or businesses. Furthermore, acquisitions or joint ventures may result in significant costs and
expenses, including those related to retention payments, equity compensation, severance pay, early retirement costs,
intangible asset amortization and asset impairment charges, enhancing controls, procedures and policies including those
related to financial reporting, disclosure, and cyber and information security, assumed litigation and other liabilities, and legal,
accounting and financial advisory fees, which could negatively affect our profitability. We may have difficulties as a result of
entering into new markets where we have limited or no direct prior experience or where competitors may have stronger
market positions.
We might fail to realize the expected benefits or strategic objectives of any acquisition, investment or joint venture we
undertake. We might not achieve our expected return on investment or may lose money. We may be adversely impacted by
liabilities that we assume from a company we acquire or in which we invest, including from that company’s known and
unknown obligations, intellectual property or other assets, terminated employees, current or former clients or other third
parties. In addition, we may fail to identify or adequately assess the magnitude of certain liabilities, shortcomings or other
circumstances prior to acquiring, investing in or partnering with a company, including potential exposure to regulatory
sanctions or liabilities resulting from an acquisition target’s previous activities, or from an acquisition’s controls related to
financial reporting, disclosure, and cyber and information security environment. If any of these circumstances occurs, they
could result in unexpected regulatory or legal exposure, including litigation with new or existing clients, unfavorable
accounting treatment, unexpected increases in taxes or other adverse effects on our relationships with clients and our
business. In addition, we have a lesser degree of control over the business operations of the joint ventures and businesses
in which we have made minority investments or in which we have acquired less than 100% of the equity. This lesser degree
of control may expose us to additional reputational, financial, legal, compliance or operational risks. Litigation, indemnification
claims and other unforeseen claims and liabilities may arise from the acquisition or operation of acquired businesses. For
example, we may face litigation or other claims as a result of certain terms and conditions of the acquisition agreement, such
as earnout payments or closing net asset adjustments. Alternatively, shareholder litigation may arise as a result of proposed
acquisitions. If we are unable to complete the number and kind of investments for which we plan, or if we are inefficient or
unsuccessful at integrating any acquired businesses into our operations, we may not be able to achieve our planned rates of
growth or improve our market share, profitability or competitive position in specific markets or services.
We also periodically evaluate, and have engaged in, the disposition of assets and businesses. Divestitures could involve
difficulties in the separation of operations, services, products and personnel, the diversion of management’s attention, the
disruption of our business and the potential loss of key employees. After reaching an agreement with a buyer for the
disposition of a business, the transaction may be subject to the satisfaction of pre-closing conditions, including obtaining
necessary regulatory and government approvals, which, if not satisfied or obtained, may prevent us from completing the
transaction. Divestitures may also involve continued financial involvement in or liability with respect to the divested assets
and businesses, such as indemnities or other financial obligations, in which the performance of the divested assets or
businesses could impact our results of operations. Any divestiture we undertake could adversely affect our results of
operations.
If we are unable to protect or enforce our intellectual property rights, or if our services or
solutions infringe upon the intellectual property rights of others or we lose our ability to utilize
the intellectual property of others, our business could be adversely affected.
Our success depends, in part, upon our ability to obtain intellectual property protection for our proprietary platforms,
methodologies, processes, software and other solutions. Existing laws of the various countries in which we provide services
or solutions may offer only limited intellectual property protection of our services or solutions, and the protection in some
countries may be very limited. We rely upon a combination of confidentiality policies and procedures, nondisclosure and
other contractual arrangements, and patent, trade secret, copyright and trademark laws to protect our intellectual property
rights. These laws are subject to change at any time and could further limit our ability to obtain or maintain intellectual
property protection. There is uncertainty concerning the scope of patent and other intellectual property protection for software
and business methods, which are fields in which we rely on intellectual property laws to protect our rights. Even where we
obtain intellectual property protection, our intellectual property rights may not prevent or deter competitors, former
employees, or other third parties from reverse engineering our solutions or proprietary methodologies and processes or
independently developing services or solutions similar to or duplicative of ours. Further, the steps we take in this regard might
not be adequate to prevent or deter infringement or other misappropriation of our intellectual property by competitors, former
employees or other third parties, and we might not be able to detect unauthorized use of, or take appropriate and timely
steps to enforce, our intellectual property rights. Enforcing our rights might also require considerable time, money and
oversight, and we may not be successful in enforcing our rights.
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Item 1A. Risk Factors
22
In addition, we cannot be sure that our services and solutions, including, for example, our software solutions, or the solutions
of others that we offer to our clients, do not infringe on the intellectual property rights of third parties (including competitors as
well as non-practicing holders of intellectual property assets), and these third parties could claim that we or our clients are
infringing upon their intellectual property rights. Furthermore, although we have established policies and procedures to
respect the intellectual property rights of third parties and that prohibit the unauthorized use of intellectual property, we may
not be aware if our employees have misappropriated and/or misused intellectual property, and their actions could result in
claims of intellectual property misappropriation and/or infringement from third parties. These claims could harm our
reputation, cause us to incur substantial costs or prevent us from offering some services or solutions in the future. Any
related proceedings could require us to expend significant resources over an extended period of time. In most of our
contracts, we agree to indemnify our clients for expenses and liabilities resulting from claimed infringements of the
intellectual property rights of third parties. In some instances, the amount of these indemnities could be greater than the
revenues we receive from the client. Any claims or litigation in this area could be time-consuming and costly, damage our
reputation and/or require us to incur additional costs to obtain the right to continue to offer a service or solution to our clients.
If we cannot secure this right at all or on reasonable terms, or we are unable to implement in a cost-effective manner
alternative technology, our results of operations could be materially adversely affected. The risk of infringement claims
against us may increase as we expand our industry software solutions and continue to develop and license our software to
multiple clients. Any infringement action brought against us or our clients could be costly to defend or lead to an expensive
settlement or judgment against us.
Further, we rely on third-party software in providing some of our services and solutions. If we lose our ability to continue
using any such software for any reason, including because it is found to infringe the rights of others, we will need to obtain
substitute software or seek alternative means of obtaining the technology necessary to continue to provide such services and
solutions. Our inability to replace such software, or to replace such software in a timely or cost-effective manner, could
materially adversely affect our results of operations.
Our results of operations and share price could be adversely affected if we are unable to
maintain effective internal controls.
The accuracy of our financial reporting is dependent on the effectiveness of our internal controls. We are required to provide
a report from management to our shareholders on our internal control over financial reporting that includes an assessment of
the effectiveness of these controls. Internal control over financial reporting has inherent limitations, including human error, the
possibility that controls could be circumvented or become inadequate because of changed conditions, and fraud. Because of
these inherent limitations, internal control over financial reporting might not prevent or detect all misstatements or fraud. If we
cannot maintain and execute adequate internal control over financial reporting or implement required new or improved
controls that provide reasonable assurance of the reliability of the financial reporting and preparation of our financial
statements for external use, we could suffer harm to our reputation, incur incremental compliance costs, fail to meet our
public reporting requirements on a timely basis, be unable to properly report on our business and our results of operations, or
be required to restate our financial statements, and our results of operations, our share price and our ability to obtain new
business could be materially adversely affected.
Changes to accounting standards or in the estimates and assumptions we make in connection
with the preparation of our consolidated financial statements could adversely affect our
financial results.
Our financial statements have been prepared in accordance with U.S. generally accepted accounting principles. It is possible
that changes in accounting standards could have a material adverse effect on our results of operations and financial position.
The application of generally accepted accounting principles requires us to make estimates and assumptions about certain
items and future events that affect our reported financial condition, and our accompanying disclosure with respect to, among
other things, revenue recognition and income taxes. Our most critical accounting estimates are described in Management’s
Discussion and Analysis of Financial Condition and Results of Operations under “Critical Accounting Policies and Estimates.”
We base our estimates on historical experience, contractual commitments and various other assumptions that we believe to
be reasonable under the circumstances and at the time they are made. These estimates and assumptions involve the use of
judgment and are subject to significant uncertainties, some of which are beyond our control. If our estimates, or the
assumptions underlying such estimates, are not correct, actual results may differ materially from our estimates, and we may
need to, among other things, adjust revenues or accrue additional costs that could adversely affect our results of operations.
We might be unable to access additional capital on favorable terms or at all. If we raise equity
capital, it may dilute our shareholders’ ownership interest in us.
We might choose to raise additional funds through public or private debt or equity financings in order to:
•
•
facilitate purchases, redemptions and exchanges of shares and pay dividends;
acquire complementary businesses or technologies;
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Item 1A. Risk Factors
23
•
•
•
take advantage of opportunities, including more rapid expansion;
develop new services and solutions and respond to competitive pressures; and
support general working capital purposes.
Any additional capital raised through the sale of equity would dilute shareholders’ ownership percentage in us. Furthermore,
any additional financing or refinancing we need might not be available on terms favorable to us, or at all.
We are incorporated in Ireland and Irish law differs from the laws in effect in the United States
and might afford less protection to our shareholders. We may also be subject to criticism and
negative publicity related to our incorporation in Ireland.
Irish law differs from the laws in effect in the United States and our shareholders could have more difficulty protecting their
interests than would shareholders of a corporation incorporated in a jurisdiction of the United States. The United States
currently does not have a treaty with Ireland providing for the reciprocal recognition and enforcement of judgments in civil
and commercial matters. As such, there is some uncertainty as to whether the courts of Ireland would recognize or enforce
judgments of U.S. courts obtained against us or our directors or officers based on U.S. federal or state civil liability laws,
including the civil liability provisions of the U.S. federal or state securities laws, or hear actions against us or those persons
based on those laws.
As an Irish company, we are governed by the Companies Act. The Companies Act differs in some significant, and possibly
material, respects from laws applicable to U.S. corporations and shareholders under various state corporation laws, including
the provisions relating to interested directors, mergers and acquisitions, takeovers, shareholder lawsuits and indemnification
of directors.
Under Irish law, the duties of directors and officers of a company are generally owed to the company only. Shareholders of
Irish companies do not generally have rights to take action against directors or officers of the company under Irish law, and
may only do so in limited circumstances. Directors of an Irish company must, in exercising their powers and performing their
duties, act with due care and skill, honestly and in good faith with a view to the best interests of the company. Directors have
a duty not to put themselves in a position in which their duties to the company and their personal interests might conflict and
also are under a duty to disclose any personal interest in any contract or arrangement with the company or any of its
subsidiaries. If a director or officer of an Irish company is found to have breached his or her duties to that company, he or she
could be held personally liable to the company in respect of that breach of duty.
Under Irish law, we must have authority from our shareholders to issue any shares, including shares that are part of the
company’s authorized but unissued share capital. In addition, unless otherwise authorized by its shareholders, when an Irish
company issues shares for cash to new shareholders, it is required first to offer those shares on the same or more favorable
terms to existing shareholders on a pro-rata basis. If we are unable to obtain these authorizations from our shareholders, or
are otherwise limited by the terms of our authorizations, our ability to issue shares under our equity compensation plans and,
if applicable, to facilitate funding acquisitions or otherwise raise capital could be adversely affected.
Some companies that conduct substantial business in the United States but that have a parent domiciled in certain other
jurisdictions have been criticized as improperly avoiding U.S. taxes or creating an unfair competitive advantage over U.S.
companies. Accenture never conducted business under a U.S. parent company and pays U.S. taxes on all of its U.S.
operations. Nonetheless, we could be subject to criticism in connection with our incorporation in Ireland.
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Item 1B. Unresolved Staff Comments
24
Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
We have major offices in the world’s leading business centers, including Boston, Chicago, New York, San Francisco, Dublin,
Frankfurt, London, Madrid, Milan, Paris, Rome, Bangalore, Beijing, Manila, Mumbai, Sao Paolo, Shanghai, Singapore,
Sydney and Tokyo, among others. In total, we have offices and operations in more than 200 cities in 50 countries around the
world. We do not own any material real property. Substantially all of our office space is leased under long-term leases with
varying expiration dates. We believe that our facilities are adequate to meet our needs in the near future.
Item 3. Legal Proceedings
The information set forth under “Legal Contingencies” in Note 15 (Commitments and Contingencies) to our Consolidated
Financial Statements under Part II, Item 8, “Financial Statements and Supplementary Data,” is incorporated herein by
reference.
Item 4. Mine Safety Disclosures
Not applicable.
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ACCENTURE 2020 FORM 10-K
Part II
Part II
25
Item 5. Market for Registrant’s Common Equity,
Related Shareholder Matters and Issuer
Purchases of Equity Securities
Accenture plc Class A ordinary shares are traded on the New York Stock Exchange under the symbol “ACN.” The New York
Stock Exchange is the principal United States market for these shares. As of October 8, 2020, there were 312 holders of
record of Accenture plc Class A ordinary shares.
There is no trading market for Accenture plc Class X ordinary shares. As of October 8, 2020, there were 16 holders of record
of Accenture plc Class X ordinary shares.
Dividends
For information about our dividend activity during fiscal 2020, see Note 14 (Shareholders’ Equity) to our Consolidated
Financial Statements under Item 8, “Financial Statements and Supplementary Data.”
On September 23, 2020, the Board of Directors of Accenture plc declared a quarterly cash dividend of $0.88 per share on
our Class A ordinary shares for shareholders of record at the close of business on October 13, 2020 payable on
November 13, 2020. For the remainder of fiscal 2021, we expect to declare additional quarterly dividends in December 2020
and March and June 2021, to be paid in February, May and August 2021, respectively, subject to the approval of the Board of
Directors.
In certain circumstances, as an Irish tax resident company, we may be required to deduct Irish dividend withholding tax
(“DWT”) (currently at the rate of 25%) from dividends paid to our shareholders. Shareholders resident in “relevant
territories” (including countries that are European Union member states (other than Ireland), the United States and other
countries with which Ireland has a tax treaty) may be exempted from Irish DWT. However, shareholders residing in other
countries will generally be subject to Irish DWT.
Recent Sales of Unregistered Securities
None.
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Item 5. Market for Registrant's Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities
26
Purchases of Accenture plc Class A Ordinary Shares
The following table provides information relating to our purchases of Accenture plc Class A ordinary shares during the fourth
quarter of fiscal 2020. For year-to-date information on all of our share purchases, redemptions and exchanges and further
discussion of our share purchase activity, see “Management’s Discussion and Analysis of Financial Condition and Results of
Operations—Liquidity and Capital Resources—Share Purchases and Redemptions.”
Period
June 1, 2020 — June 30, 2020
July 1, 2020 — July 31, 2020
August 1, 2020 — August 31, 2020
Total (4)
Total Number of
Shares
Purchased
Average
Price Paid
per Share (1)
Total Number of
Shares Purchased as
Part of Publicly
Announced Plans or
Programs (2)
Approximate Dollar Value
of Shares that May Yet Be
Purchased Under the Plans or
Programs (3)
(in millions of U.S. dollars)
151,482 $
1,336,948
1,065,906
2,554,336 $
211.25
220.44
233.39
225.30
126,699 $
1,301,112
1,033,283
2,461,094
1,857
1,563
1,315
(1) Average price paid per share reflects the total cash outlay for the period, divided by the number of shares acquired, including those acquired by
purchase or redemption for cash and any acquired by means of employee forfeiture.
(2) Since August 2001, the Board of Directors of Accenture plc has authorized and periodically confirmed a publicly announced open-market share
purchase program for acquiring Accenture plc Class A ordinary shares. During the fourth quarter of fiscal 2020, we purchased 2,461,094
Accenture plc Class A ordinary shares under this program for an aggregate price of $555 million. The open-market purchase program does not
have an expiration date.
(3) As of August 31, 2020, our aggregate available authorization for share purchases and redemptions was $1,315 million, which management has
the discretion to use for either our publicly announced open-market share purchase program or our other share purchase programs. Since
August 2001 and as of August 31, 2020, the Board of Directors of Accenture plc has authorized an aggregate of $35.1 billion for share
purchases and redemptions by Accenture plc and Accenture Canada Holdings Inc. On September 20, 2020, the Board of Directors of Accenture
plc approved $5,000 million in additional share repurchase authority bringing Accenture’s total outstanding authority to $6,315 million.
(4) During the fourth quarter of fiscal 2020, Accenture purchased 93,242 Accenture plc Class A ordinary shares in transactions unrelated to publicly
announced share plans or programs. These transactions consisted of acquisitions of Accenture plc Class A ordinary shares primarily via share
withholding for payroll tax obligations due from employees and former employees in connection with the delivery of Accenture plc Class A
ordinary shares under our various employee equity share plans. These purchases of shares in connection with employee share plans do not
affect our aggregate available authorization for our publicly announced open-market share purchase and our other share purchase programs.
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Item 5. Market for Registrant's Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities
27
Item 6. Selected Financial Data
The data for fiscal 2020, 2019 and 2018 and as of August 31, 2020 and 2019 are derived from the audited Consolidated
Financial Statements and related Notes that are included elsewhere in this report. The data for fiscal 2017 and 2016 and as
of August 31, 2018, 2017 and 2016 are derived from the audited Consolidated Financial Statements and related Notes that
are not included in this report. The selected financial data should be read in conjunction with “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” and our Consolidated Financial Statements and related Notes
included elsewhere in this report.
(in millions of U.S. dollars)
Income Statement Data
Revenues
Operating income
Net income
Net income attributable to Accenture plc
Earnings Per Class A Ordinary Share
Basic
Diluted
Dividends per ordinary share
2020 (1)
2019
2018 (2) (3)
2017 (2) (4)
2016 (2) (5)
Fiscal
$
44,327 $
43,215 $
40,993 $
36,177 $
34,254
6,514
5,185
5,108
6,305
4,846
4,779
5,899
4,215
4,060
5,191
3,635
3,445
$
8.03 $
7.49 $
6.46 $
5.56 $
7.89
3.20
7.36
2.92
6.34
2.66
5.44
2.42
4,846
4,350
4,112
6.58
6.45
2.20
(1)
Includes the impact of $280 million, post-tax, gains on an investment recorded during fiscal 2020. See “Management’s Discussion and Analysis
of Financial Condition and Results of Operations—Results of Operations for Fiscal 2020 Compared to Fiscal 2019—Other Income (Expense),
net.”
(2) Effective September 1, 2018, we adopted FASB ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) and eliminated our net
revenues presentation and FASB ASU No. 2017-07, Compensation-Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic
Pension Cost and Net Periodic Postretirement Benefit Cost. Prior period amounts have been revised to conform with the current period
presentation.
(3)
(4)
(5)
Includes the impact of a $258 million charge associated with tax law changes recorded during fiscal 2018.
Includes the impact of a $312 million, post-tax, pension settlement charge recorded during fiscal 2017.
Includes the impact of a $745 million, post-tax, gain on sale of businesses recorded during fiscal 2016.
(in millions of U.S. dollars)
Balance Sheet Data
Cash and cash equivalents
Total assets
Long-term debt, net of current portion
Accenture plc shareholders’ equity
August 31,
2020
August 31,
2019
August 31,
2018
August 31,
2017
August 31,
2016
$
8,415 $
6,127 $
5,061 $
4,127 $
37,079
29,790
24,449
54
16
20
17,001
14,409
10,365
22,690
22
8,949
4,906
20,609
24
7,555
Table of Contents
ACCENTURE 2020 FORM 10-K
Item 6. Selected Financial Data
28
Item 7. Management’s Discussion and Analysis
of Financial Condition and Results of
Operations
The following discussion and analysis should be read in conjunction with our Consolidated Financial
Statements and related Notes included elsewhere in this Annual Report on Form 10-K. This discussion
and analysis also contains forward-looking statements and should also be read in conjunction with the
disclosures and information contained in “Disclosure Regarding Forward-Looking Statements” and
“Risk Factors” in this Annual Report on Form 10-K.
We use the terms “Accenture,” “we,” the “Company,” “our” and “us” in this report to refer to Accenture
plc and its subsidiaries. All references to years, unless otherwise noted, refer to our fiscal year, which
ends on August 31. For example, a reference to “fiscal 2020” means the 12-month period that ended on
August 31, 2020. All references to quarters, unless otherwise noted, refer to the quarters of our fiscal
year.
We use the term “in local currency” so that certain financial results may be viewed without the impact of
foreign currency exchange rate fluctuations, thereby facilitating period-to-period comparisons of
business performance. Financial results “in local currency” are calculated by restating current period
activity into U.S. dollars using the comparable prior-year period’s foreign currency exchange rates. This
approach is used for all results where the functional currency is not the U.S. dollar.
Change in Reportable Segments
Effective March 1, 2020, we began managing our business under a new growth model through our three geographic
markets, North America, Europe and Growth Markets, which became our reportable segments in the third quarter of fiscal
2020. Prior to this change, our reportable segments were our five industry groups, Communications, Media & Technology,
Financial Services, Health & Public Service, Products and Resources. For additional information, see our Form 8-K filed on
January 13, 2020.
Overview
The COVID-19 pandemic has caused a significant loss of life, disrupted businesses and restricted travel worldwide, causing
significant economic disruption and uncertainty. This disruption and uncertainty has had and continues to have a significant
adverse impact on our business, operations and financial results. For fiscal 2020, our revenues grew 3% in U.S. dollars and
4% in local currency, a decrease compared to the revenue growth experienced in fiscal 2019. Revenues for the first half of
fiscal 2020 grew 7% in U.S. dollars and 8% in local currency compared to the same period in fiscal 2019. On March 11,
2020, the World Health Organization declared COVID-19 a pandemic, and during the second half of fiscal 2020, our
revenues declined 1% in U.S. dollars and were flat in local currency compared to the same period in fiscal 2019. The
pandemic impacted almost all aspects of our business and forced us to quickly adapt the way we operate. As described
below, we took actions to shift the majority of our workforce to a remote working environment to ensure the continuity of our
business, including the sales and delivery of services to our clients, and to respond to a rapidly changing demand
environment from our clients.
As a result of the COVID-19 pandemic, we enabled approximately 95% of our global workforce to work from home and
suspended substantially all business travel. We continue to develop and implement our comprehensive plan to return to our
and our clients’ offices where permissible, with our people’s safety and the needs of our clients guiding how we manage our
phased transition.
We experienced reduced demand for our services during the second half of fiscal 2020 as some clients reprioritized and
delayed certain work as a result of the pandemic, particularly in the Travel, Retail, Energy, High Tech and Industrial industries
and primarily for our consulting services. We also experienced increased demand in the Public Service, Software & Platforms
and Life Sciences industries and from clients across all of our industry groups in connection with their digital transformations,
the adoption of cloud technologies and security-related services. In this current market, the level of revenues we achieve is
based on our ability to deliver market-leading services while deploying skilled teams of professionals effectively.
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ACCENTURE 2020 FORM 10-K
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
29
For further information on the impact to our results for fiscal 2020, please see “Summary of Results” below. For a discussion
of risks related to the COVID-19 pandemic, see “Our results of operations have been significantly adversely affected and
could in the future be materially adversely impacted by the COVID-19 pandemic.” under Item 1A, “Risk Factors.”
Summary of Results
Revenues for fiscal 2020 increased 3% in U.S. dollars and 4% in local currency compared to fiscal 2019. This included the
impact of a decline in reimbursable travel costs, which reduced revenues approximately 1%. During fiscal 2020, revenue
growth in local currency was strong in Growth Markets, solid in North America and flat in Europe. We experienced local
currency revenue growth that was very strong in Health & Public Service, modest in Products, Communications, Media &
Technology and Financial Services and flat in Resources. Revenue growth in local currency was strong in outsourcing and
modest in consulting during fiscal 2020. The business environment remained competitive, and the changes in demand have
led to increased pricing pressure, particularly for our consulting services. We use the term “pricing” to mean the contract
profitability or margin on the work that we sell.
In our consulting business, revenues for fiscal 2020 were flat in U.S. dollars and increased 2% in local currency compared to
fiscal 2019. This included the impact of a decline in reimbursable travel costs, which reduced consulting revenues
approximately 2%. Consulting revenue growth in local currency in fiscal 2020 was led by strong growth in Growth Markets
and modest growth in North America, partially offset by a modest decline in Europe. Our consulting revenue continues to be
driven by digital-, cloud- and security-related services and assisting clients with the adoption of new technologies. In addition,
clients continue to be focused on initiatives designed to deliver cost savings and operational efficiency, as well as projects to
integrate their global operations and grow and transform their businesses.
In our outsourcing business, revenues for fiscal 2020 increased 6% in U.S. dollars and 7% in local currency compared to
fiscal 2019. Outsourcing revenue growth in local currency in fiscal 2020 was led by strong growth across all geographic
markets. We continue to experience growing demand to assist clients with the operation and maintenance of digital-related
services and cloud enablement. In addition, clients continue to be focused on transforming their operations to improve
effectiveness and cost efficiency.
As we are a global company, our revenues are denominated in multiple currencies and may be significantly affected by
currency exchange rate fluctuations. The majority of our revenues are denominated in currencies other than the U.S. dollar,
including the Euro, Japanese yen, and U.K. pound. There continues to be volatility in foreign currency exchange rates.
Unfavorable fluctuations in foreign currency exchange rates have had and could have in the future a material effect on our
financial results. If the U.S. dollar weakens against other currencies, resulting in favorable currency translation, our revenues,
revenue growth and results of operations in U.S. dollars may be higher. If the U.S. dollar strengthens against other
currencies, resulting in unfavorable currency translation, our revenues, revenue growth and results of operations in U.S.
dollars may be lower. The U.S. dollar strengthened against various currencies during fiscal 2020, resulting in unfavorable
currency translation and U.S. dollar revenue growth that was approximately 1% lower than our revenue growth in local
currency for the year. Assuming that exchange rates stay within recent ranges, we estimate that our fiscal 2021 revenue
growth in U.S. dollars will be approximately 2% higher than our revenue growth in local currency.
The primary categories of operating expenses include Cost of services, Sales and marketing and General and administrative
costs. Cost of services is primarily driven by the cost of client-service personnel, which consists mainly of compensation,
subcontractor and other personnel costs, and non-payroll costs on outsourcing contracts. Cost of services includes a variety
of activities such as: contract delivery; recruiting and training; software development; and integration of acquisitions. Sales
and marketing costs are driven primarily by: compensation costs for business development activities; marketing- and
advertising-related activities; and certain acquisition-related costs. General and administrative costs primarily include costs
for non-client-facing personnel, information systems, office space and certain acquisition-related costs.
Utilization for fiscal 2020 was 90%, down from 91% in fiscal 2019. We hire to meet current and projected future demand. We
proactively plan and manage the size and composition of our workforce and take actions as needed to address changes in
the anticipated demand for our services and solutions, given that compensation costs are the most significant portion of our
operating expenses. Our headcount, the majority of which serve our clients, increased to approximately 506,000 as of
August 31, 2020, compared to approximately 492,000 as of August 31, 2019. The year-over-year increase in our headcount
reflects an overall increase in demand for our services and solutions, as well as headcount added in connection with
acquisitions. Attrition, excluding involuntary terminations, for fiscal 2020 was 12%, down from 17% in fiscal 2019. We
evaluate voluntary attrition, adjust levels of new hiring and use involuntary terminations as means to keep our supply of skills
and resources in balance with changes in client demand. In addition, we adjust compensation in certain skill sets and
geographies in order to attract and retain appropriate numbers of qualified employees. For the majority of our personnel,
compensation increases become effective December 1st of each fiscal year. We strive to adjust pricing and/or the mix of
resources to reduce the impact of compensation increases on our margin. Our ability to grow our revenues and maintain or
increase our margin could be adversely affected if we are unable to: keep our supply of skills and resources in balance with
changes in the types or amounts of services and solutions clients are demanding; recover increases in compensation; deploy
our employees globally on a timely basis; manage attrition; and/or effectively assimilate and utilize new employees.
Table of Contents
ACCENTURE 2020 FORM 10-K
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
30
Gross margin (Revenues less Cost of services as a percentage of Revenues) for fiscal 2020 was 31.5%, compared with
30.8% for fiscal 2019. The increase in gross margin for fiscal 2020 was due to lower non-payroll costs, primarily for travel,
partially offset by an increase in labor costs as a percentage of revenues compared to fiscal 2019.
Sales and marketing and General and administrative costs as a percentage of revenues were 16.8% for fiscal 2020,
compared with 16.2% for fiscal 2019. For fiscal 2020 compared to fiscal 2019, Sales and marketing costs as a percentage of
revenues increased 10 basis points and General and administrative costs as a percentage of revenues increased 50 basis
points, primarily due to higher technology and facilities costs.
Operating margin (Operating income as a percentage of revenues) for fiscal 2020 was 14.7%, compared with 14.6% for
fiscal 2019.
During fiscal 2020, we recorded gains of $332 million and $52 million in tax expense related to our investment in Duck Creek
Technologies. For additional information, see Note 1 (Summary of Significant Accounting Policies) to our Consolidated
Financial Statements under Item 8, “Financial Statements and Supplementary Data.”
The effective tax rate for fiscal 2020 was 23.5%, compared with 22.5% for fiscal 2019. Absent the $332 million gains on an
investment and related $52 million in tax expense, our effective tax rate for fiscal 2020 would have been 23.9%.
Diluted earnings per share were $7.89 for fiscal 2020, compared with $7.36 for fiscal 2019. The $280 million gains on an
investment, net of taxes, increased diluted earnings per share by $0.43 in fiscal 2020. Excluding the impact of these gains,
diluted earnings per share would have been $7.46 for fiscal 2020.
We have presented our effective tax rate and diluted earnings per share excluding the impact of gains related to an
investment in fiscal 2020, as we believe doing so facilitates understanding as to the impact of this item and our performance
in comparison to the prior period.
Our operating income and diluted earnings per share are affected by currency exchange rate fluctuations on revenues and
costs. Most of our costs are incurred in the same currency as the related revenues. Where practical, we seek to manage
foreign currency exposure for costs not incurred in the same currency as the related revenues, such as the costs associated
with our global delivery model, by using currency protection provisions in our customer contracts and through our hedging
programs. For more information on our hedging programs, see Note 9 (Financial Instruments) to our Consolidated Financial
Statements under Item 8, “Financial Statements and Supplementary Data.”
Bookings
New bookings for fiscal 2020 were $49.6 billion, with consulting bookings of $25.8 billion and outsourcing bookings of $23.7
billion, compared to $45.5 billion in fiscal 2019, with consulting bookings of $24.7 billion and outsourcing bookings of $20.8
billion.
We provide information regarding our new bookings, which include new contracts, including those acquired through
acquisitions, as well as renewals, extensions and changes to existing contracts, because we believe doing so provides
useful trend information regarding changes in the volume of our new business over time. New bookings can vary significantly
quarter to quarter depending in part on the timing of the signing of a small number of large outsourcing contracts. The types
of services and solutions clients are demanding and the pace and level of their spending may impact the conversion of new
bookings to revenues. For example, outsourcing bookings, which are typically for multi-year contracts, generally convert to
revenue over a longer period of time compared to consulting bookings.
Information regarding our new bookings is not comparable to, nor should it be substituted for, an analysis of our revenues
over time. New bookings involve estimates and judgments. There are no third-party standards or requirements governing the
calculation of bookings. We do not update our new bookings for material subsequent terminations or reductions related to
bookings originally recorded in prior fiscal years. New bookings are recorded using then-existing foreign currency exchange
rates and are not subsequently adjusted for foreign currency exchange rate fluctuations.
The majority of our contracts are terminable by the client on short notice with little or no termination penalties, and some
without notice. Only the non-cancelable portion of these contracts is included in the performance obligations disclosed in
Note 2 (Revenues) to our Consolidated Financial Statements under Item 8, "Financial Statements and Supplementary Data."
Accordingly, a significant portion of what we consider contract bookings is not included in our remaining performance
obligations.
Table of Contents
ACCENTURE 2020 FORM 10-K
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
31
Critical Accounting Policies and Estimates
The preparation of our Consolidated Financial Statements in conformity with U.S. generally accepted accounting principles
requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the Consolidated Financial Statements and the reported amounts of revenues
and expenses. We continually evaluate our estimates, judgments and assumptions based on available information and
experience. Because the use of estimates is inherent in the financial reporting process, actual results could differ from those
estimates. Certain of our accounting policies require higher degrees of judgment than others in their application. These
include certain aspects of accounting for revenue recognition and income taxes.
Revenue Recognition
Determining the method and amount of revenue to recognize requires us to make judgments and estimates. Specifically,
complex arrangements with nonstandard terms and conditions may require contract interpretation to determine the
appropriate accounting, including whether promised goods and services specified in an arrangement are distinct
performance obligations and should be accounted for separately. Other judgments include determining whether performance
obligations are satisfied over-time or at a point-in-time and the selection of the method to measure progress towards
completion.
We measure progress towards completion for technology integration consulting services using costs incurred to date relative
to total estimated costs at completion. Revenues, including estimated fees, are recorded proportionally as costs are
incurred. The amount of revenue recognized for these contracts in a period is dependent on our ability to estimate total
contract costs. We continually evaluate our estimates of total contract costs based on available information and experience.
Additionally, the nature of our contracts gives rise to several types of variable consideration, including incentive fees. Many
contracts include incentives or penalties related to costs incurred, benefits produced or adherence to schedules that may
increase the variability in revenues and margins earned on such contracts. We conduct reviews prior to signing such
contracts to evaluate whether these incentives are reasonably achievable. Our estimates are monitored over the lives of our
contracts and are based on an assessment of our anticipated performance, historical experience and other information
available at the time.
For additional information, see Note 2 (Revenues) to our Consolidated Financial Statements under Item 8, “Financial
Statements and Supplementary Data.”
Income Taxes
On December 22, 2017, the U.S. enacted the Tax Cuts and Jobs Act (the “Tax Act”), which significantly changed U.S. tax law.
The Tax Act lowered the U.S. statutory federal income tax rate from 35% to 21%, effective January 1, 2018, resulting in a
blended U.S. statutory federal income tax rate of 25.7% for our fiscal year ended August 31, 2018 and a U.S. statutory
federal income tax rate of 21.0% for our fiscal year ended August 31, 2019. The Tax Act’s “base erosion and anti-abuse tax”
provision, and regulations issued thereunder, adversely impact our effective tax rate by limiting our ability to deduct certain
expenses.
Determining the consolidated provision for income tax expense, income tax liabilities and deferred tax assets and liabilities
involves judgment. Deferred tax assets and liabilities, measured using enacted tax rates, are recognized for the future tax
consequences of temporary differences between the tax and financial statement bases of assets and liabilities. As a global
company, we calculate and provide for income taxes in each of the tax jurisdictions in which we operate. This involves
estimating current tax exposures in each jurisdiction as well as making judgments regarding the recoverability of deferred tax
assets. Tax exposures can involve complex issues and may require an extended period to resolve. In assessing the
realizability of deferred tax assets, we consider whether it is more likely than not that some portion or all of the deferred tax
assets will not be realized and adjust the valuation allowances accordingly. Factors considered in making this determination
include the period of expiration of the tax asset, planned use of the tax asset, tax planning strategies and historical and
projected taxable income as well as tax liabilities for the tax jurisdiction in which the tax asset is located. Valuation
allowances will be subject to change in each future reporting period as a result of changes in one or more of these factors.
Changes in the geographic mix or estimated level of annual income before taxes can affect the overall effective tax rate.
We apply an estimated annual effective tax rate to our quarterly operating results to determine the interim provision for
income tax expense. A change in judgment that impacts the measurement of a tax position taken in a prior year is
recognized as a discrete item in the interim period in which the change occurs. In the event there is a significant unusual or
infrequent item recognized in our quarterly operating results, the tax attributable to that item is recorded in the interim period
in which it occurs. We release stranded tax effects from Accumulated other comprehensive loss using the specific
identification approach for our defined benefit plans and the portfolio approach for other items.
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ACCENTURE 2020 FORM 10-K
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
32
No taxes have been provided on undistributed foreign earnings that are planned to be indefinitely reinvested. If future events,
including material changes in estimates of cash, working capital and long-term investment requirements, necessitate that
these earnings be distributed, an additional provision for taxes may apply, which could materially affect our future effective
tax rate. We currently do not foresee any event that would require us to distribute these indefinitely reinvested earnings. For
additional information, see Note 11 (Income Taxes) to our Consolidated Financial Statements under Item 8, “Financial
Statements and Supplementary Data.”
As a matter of course, we are regularly audited by various taxing authorities, and sometimes these audits result in proposed
assessments where the ultimate resolution may result in us owing additional taxes. We establish tax liabilities or reduce tax
assets when, despite our belief that our tax return positions are appropriate and supportable under local tax law, we believe
we may not succeed in realizing the tax benefit of certain positions if challenged. In evaluating a tax position, we determine
whether it is more likely than not that the position will be sustained upon examination, including resolution of any related
appeals or litigation processes, based on the technical merits of the position. Our estimate of the ultimate tax liability contains
assumptions based on past experiences, judgments about potential actions by taxing jurisdictions as well as judgments
about the likely outcome of issues that have been raised by taxing jurisdictions. The tax position is measured at the largest
amount of benefit that is greater than 50 percent likely of being realized upon settlement. We evaluate tax positions each
quarter and adjust the related tax liabilities or assets in light of changing facts and circumstances, such as the progress of a
tax audit or the expiration of a statute of limitations. We believe the estimates and assumptions used to support our
evaluation of tax positions are reasonable. However, final determinations of prior-year tax liabilities, either by settlement with
tax authorities or expiration of statutes of limitations, could be materially different from estimates reflected in assets and
liabilities and historical income tax provisions. The outcome of these final determinations could have a material effect on our
income tax provision, net income, or cash flows in the period in which that determination is made. We believe our tax
positions comply with applicable tax law and that we have adequately accounted for these positions.
Revenues by Segment/Geographic Market
Effective March 1, 2020, we began managing our business under a new growth model through our three geographic
markets, North America, Europe and Growth Markets, which became our reportable segments in the third quarter of fiscal
2020. Prior to this change, our reportable segments were our five industry groups, Communications, Media & Technology,
Financial Services, Health & Public Service, Products and Resources. See Note 7 (Goodwill and Intangible Assets) and Note
16 (Segment Reporting) to our Consolidated Financial Statements under Item 8, “Financial Statements and Supplementary
Data” for further details regarding the change in our reportable segments.
In addition to reporting revenues by geographic markets, we also report revenues by two types of work: consulting and
outsourcing, which represent the services sold by our geographic markets. Consulting revenues, which include strategy,
management and technology consulting and technology integration consulting, reflect a finite, distinct project or set of
projects with a defined outcome and typically a defined set of specific deliverables. Outsourcing revenues typically reflect
ongoing, repeatable services or capabilities provided to transition, run and/or manage operations of client systems or
business functions.
From time to time, our geographic markets work together to sell and implement certain contracts. The resulting revenues and
costs from these contracts may be apportioned among the participating geographic markets. Generally, operating expenses
for each geographic market have similar characteristics and are subject to the same factors, pressures and challenges.
However, the economic environment and its effects on the industries served by our geographic markets affect revenues and
operating expenses within our geographic markets to differing degrees. The mix between consulting and outsourcing is not
uniform among our geographic markets. Local currency fluctuations also tend to affect our geographic markets differently,
depending on the geographic concentrations and locations of their businesses.
While we provide discussion about our results of operations below, we cannot measure how much of our revenue growth in a
particular period is attributable to changes in price or volume. Management does not track standard measures of unit or rate
volume. Instead, our measures of volume and price are extremely complex, as each of our services contracts is unique,
reflecting a customized mix of specific services that does not fit into standard comparability measurements. Revenue for our
services is a function of the nature of each service to be provided, the skills required and the outcome sought, as well as
estimated cost, risk, contract terms and other factors.
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ACCENTURE 2020 FORM 10-K
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
33
Results of Operations for Fiscal 2020 Compared to Fiscal 2019
Effective March 1, 2020, we began managing our business under a new growth model through our three geographic
markets, North America, Europe and Growth Markets, which became our reportable segments in the third quarter of fiscal
2020. Prior to this change, our reportable segments were our five operating groups, Communications, Media & Technology,
Financial Services, Health & Public Service, Products and Resources, which we now refer to as our industry groups.
Revenues by geographic market, industry group and type of work are as follows:
(in millions of U.S. dollars)
GEOGRAPHIC MARKETS
North America
Europe
Growth Markets
TOTAL REVENUES
INDUSTRY GROUPS
Communications, Media & Technology
Financial Services
Health & Public Service
Products
Resources
Other
TOTAL REVENUES
TYPE OF WORK
Consulting
Outsourcing
TOTAL REVENUES
n/m = not meaningful
$
$
$
$
$
Fiscal
2020
2019 (1)
Percent
Increase
(Decrease)
U.S.
Dollars
Percent
Increase
Local
Currency
Percent of Total
Revenues
for Fiscal
2020
2019 (1)
$
20,982 $
14,402
8,943
44,327 $
8,883 $
8,518
8,023
12,272
6,612
19
19,986
14,696
8,533
43,215
8,757
8,494
7,161
12,005
6,772
26
5 %
(2)
5
3 %
5 %
—
8
47 %
32
20
46 %
34
20
4 %
100 %
100 %
1 %
3 %
20 %
20 %
—
12
2
(2)
n/m
2
13
3
—
n/m
19
18
28
15
—
20
17
28
16
—
44,327 $
43,215
3 %
4 %
100 %
100 %
24,227 $
20,100
44,327 $
24,177
19,038
43,215
— %
6
3 %
2 %
7
4 %
55 %
45
100 %
56 %
44
100 %
Amounts in table may not total due to rounding
(1) Effective September 1, 2019 we revised the reporting of our geographic markets for the movement of one country from Growth Markets to
Europe. Prior period amounts have been reclassified to conform with the current period presentation.
Revenues
Revenues were impacted by a reduction of approximately 1% from a decline in revenues from reimbursable travel costs in
fiscal 2020 across all markets. The following revenues commentary discusses local currency revenue changes for fiscal 2020
compared to fiscal 2019:
Geographic Markets
•
•
•
North America revenues increased 5% in local currency, led by growth in Public Service, Life Sciences, Software &
Platforms, Health and Banking & Capital Markets. These increases were partially offset by declines in Chemicals &
Natural Resources and High Tech. Revenue growth was driven by the United States.
Europe revenues were flat in local currency, led by growth in Life Sciences, Software & Platforms, Chemicals & Natural
Resources and Health. These increases were partially offset by declines in Banking & Capital Markets, Consumer
Goods, Retail & Travel Services and High Tech. Revenues were led by growth in Italy and Germany, partially offset by
declines in the United Kingdom, Spain and France.
Growth Markets revenues increased 8% in local currency, led by growth in Software & Platforms, Banking & Capital
Markets, Public Service, Chemicals & Natural Resources, Industrial and Life Sciences. Revenue growth was driven by
Japan, as well as Brazil.
Operating Expenses
Operating expenses for fiscal 2020 increased $903 million, or 2%, over fiscal 2019, and decreased as a percentage of
revenues to 85.3% from 85.4% during this period.
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ACCENTURE 2020 FORM 10-K
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
34
Operating expenses by category are as follows:
(in millions of U.S. dollars)
Operating Expenses
Cost of services
Sales and marketing
General and administrative costs
Amounts in table may not total due to rounding.
Cost of Services
Fiscal
2020
2019
Increase
(Decrease)
$
37,813
85.3 % $
36,910
85.4 % $
30,351
4,626
2,837
68.5 %
29,900
10.4 %
6.4 %
4,447
2,562
69.2 %
10.3 %
5.9 %
903
451
178
274
Cost of services for fiscal 2020 increased $451 million, or 2%, over fiscal 2019, and decreased as a percentage of revenues
to 68.5% from 69.2% during this period. Gross margin for fiscal 2020 increased to 31.5% from 30.8% in fiscal 2019. The
increase in gross margin for fiscal 2020 was primarily due to lower non-payroll costs, primarily for travel, partially offset by an
increase in labor costs as a percentage of revenues compared to fiscal 2019.
Sales and Marketing
Sales and marketing expense for fiscal 2020 increased $178 million, or 4%, over fiscal 2019, and increased as a percentage
of revenues to 10.4% from 10.3% during this period.
General and Administrative Costs
General and administrative costs for fiscal 2020 increased $274 million, or 11%, over fiscal 2019, and increased as a
percentage of revenues to 6.4% from 5.9% during this period. The increase as a percentage of revenues was primarily due
to higher technology and facilities costs compared to fiscal 2019.
Operating Income and Operating Margin
Operating income for fiscal 2020 increased $209 million, or 3%, over fiscal 2019. Effective March 1, 2020, we began
managing our business under a new growth model through our three geographic markets, North America, Europe and
Growth Markets, which became our reportable segments in the third quarter of fiscal 2020. Prior to this change, our
reportable segments were our five industry groups, Communications, Media & Technology, Financial Services, Health &
Public Service, Products and Resources.
Operating income and operating margin for each of the geographic markets are as follows:
(in millions of U.S. dollars)
North America
Europe
Growth Markets
TOTAL
Amounts in table may not total due to rounding.
Fiscal
2020
2019
Operating
Income
Operating
Margin
Operating
Income
Operating
Margin
Increase
(Decrease)
$
$
3,170
1,799
1,545
6,514
15 % $
12 %
17 %
14.7 % $
3,107
2,013
1,184
6,305
16 % $
14
14
14.6 % $
62
(214)
360
209
We estimate that the aggregate percentage impact of foreign currency exchange rates on our operating income during fiscal
2020 was similar to that disclosed for revenue for each geographic market. The reduction in travel costs during fiscal 2020
had a favorable impact on operating income. The commentary below provides insight into other factors affecting geographic
market performance and operating income for fiscal 2020 compared with fiscal 2019:
•
•
•
North America operating income increased primarily due to revenue growth, partially offset by lower outsourcing contract
profitability and higher sales and marketing costs as a percentage of revenues.
Europe operating income decreased due to lower consulting contract profitability and higher sales and marketing costs
as a percentage of revenues.
Growth Markets operating income increased primarily due to revenue growth and higher contract profitability.
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ACCENTURE 2020 FORM 10-K
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
35
Other Income (Expense), net
Other income (expense), net primarily consists of foreign currency gains and losses, non-operating components of pension
expense, as well as gains and losses associated with our investments. During fiscal 2020, other income (expense) increased
$342 million over fiscal 2019, primarily due to gains of $332 million related to our investment in Duck Creek Technologies.
For additional information, see Note 1 (Summary of Significant Accounting Policies) to our Consolidated Financial
Statements under Item 8, “Financial Statements and Supplementary Data.”
Income Tax Expense
The effective tax rate for fiscal 2020 was 23.5%, compared with 22.5% for fiscal 2019. Absent the $332 million gains on an
investment and related $52 million in tax expense, our effective tax rate for fiscal 2020 would have been 23.9%. The higher
effective tax rate for fiscal 2020 was primarily due to lower benefits from final determinations of prior year taxes and the
phased-in effects of U.S. tax reform, partially offset by higher tax benefits from share-based payments. For additional
information, see Note 11 (Income Taxes) to our Consolidated Financial Statements under Item 8, “Financial Statements and
Supplementary Data.”
Net Income Attributable to Noncontrolling Interests
Net income attributable to noncontrolling interests reflects the income earned or expense incurred attributable to the equity
interest that some current and former members of Accenture Leadership and their permitted transferees have in our
Accenture Canada Holdings Inc. subsidiary. See “Business—Organizational Structure.” Noncontrolling interests also includes
amounts primarily attributable to noncontrolling shareholders in our Avanade Inc. subsidiary. Net income attributable to
Accenture plc represents the income attributable to the shareholders of Accenture plc.
Earnings Per Share
Diluted earnings per share were $7.89 for fiscal 2020, compared with $7.36 for fiscal 2019. The $280 million gains on an
investment, net of taxes, increased diluted earnings per share by $0.43 in fiscal 2020. Excluding the impact of these gains,
diluted earnings per share would have been $7.46 for fiscal 2020. For information regarding our earnings per share
calculations, see Note 3 (Earnings Per Share) to our Consolidated Financial Statements under Item 8, “Financial Statements
and Supplementary Data.”
The increase in diluted earnings per share is due to the following factors:
Earnings Per Share
FY19 As Reported
Gains on an investment, net of tax
Revenue and operating results
Lower share count
Net Income attributable to non-controlling interest
Non-operating income
Higher effective tax rate
FY20 As Reported
Fiscal 2020
$
$
7.36
0.43
0.24
0.03
(0.01)
(0.02)
(0.14)
7.89
Results of Operations for Fiscal 2019 Compared to Fiscal 2018
Our Annual Report on Form 10-K for the fiscal year ended August 31, 2019 includes a discussion and analysis of our
financial condition and results of operations for the year ended August 31, 2018 in Item 7 of Part II, “Management’s
Discussion and Analysis of Financial Condition and Results of Operations.”
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ACCENTURE 2020 FORM 10-K
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
36
Liquidity and Capital Resources
Our primary sources of liquidity are cash flows from operations, available cash reserves and debt capacity available under
various credit facilities. We could raise additional funds through other public or private debt or equity financings. We may use
our available or additional funds to, among other things:
•
•
•
•
facilitate purchases, redemptions and exchanges of shares and pay dividends;
acquire complementary businesses or technologies;
take advantage of opportunities, including more rapid expansion; or
develop new services and solutions.
As of August 31, 2020, Cash and cash equivalents were $8.4 billion, compared with $6.1 billion as of August 31, 2019.
Cash flows from operating, investing and financing activities, as reflected in our Consolidated Cash Flows Statements, are
summarized in the following table:
(in millions of U.S. dollars)
Net cash provided by (used in):
Operating activities
Investing activities
Financing activities
Effect of exchange rate changes on cash and cash equivalents
Fiscal
2020
2019
Change
$
8,215 $
6,627 $
1,588
(1,895)
(4,049)
17
(1,756)
(3,767)
(39)
(139)
(282)
56
Net increase (decrease) in cash and cash equivalents
$
2,288 $
1,065 $
1,223
Operating activities: The $1,588 million increase in operating cash flows was due to higher net income and changes in
operating assets and liabilities, including higher collections on net client balances (receivables from clients, contract assets
and deferred revenues).
Investing activities: The $139 million increase in cash used was due to higher spending on business acquisitions, partially
offset by increased proceeds from investments. For additional information, see Note 6 (Business Combinations) to our
Consolidated Financial Statements under Item 8, “Financial Statements and Supplementary Data.”
Financing activities: The $282 million increase in cash used was primarily due to an increase in the net purchases of
shares as well as an increase in cash dividends paid, partially offset by an increase in net proceeds from share issuances.
For additional information, see Note 14 (Shareholders’ Equity) to our Consolidated Financial Statements under Item 8,
“Financial Statements and Supplementary Data.”
We believe that our current and longer-term working capital, investments and other general corporate funding requirements
will be satisfied for the next twelve months and thereafter through cash flows from operations and, to the extent necessary,
from our borrowing facilities and future financial market activities.
Substantially all of our cash is held in jurisdictions where there are no regulatory restrictions or material tax effects on the free
flow of funds. In addition, domestic cash inflows for our Irish parent, principally dividend distributions from lower-tier
subsidiaries, have been sufficient to meet our historic cash requirements, and we expect this to continue into the future.
Borrowing Facilities
See Note 10 (Borrowings and Indebtedness) to our Consolidated Financial Statements under Item 8, “Financial Statements
and Supplementary Data.”
Share Purchases and Redemptions
We intend to continue to use a significant portion of cash generated from operations for share repurchases during fiscal
2021. The number of shares ultimately repurchased under our open-market share purchase program may vary depending on
numerous factors, including, without limitation, share price and other market conditions, our ongoing capital allocation
planning, the levels of cash and debt balances, other demands for cash, such as acquisition activity, general economic and/
or business conditions, and board and management discretion. Additionally, as these factors may change over the course of
the year, the amount of share repurchase activity during any particular period cannot be predicted and may fluctuate from
time to time. Share repurchases may be made from time to time through open-market purchases, in respect of purchases
and redemptions of Accenture Canada Holdings Inc. exchangeable shares, through the use of Rule 10b5-1 plans and/or by
Table of Contents
ACCENTURE 2020 FORM 10-K
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
37
other means. The repurchase program may be accelerated, suspended, delayed or discontinued at any time, without notice.
For additional information, see Note 14 (Shareholders’ Equity) to our Consolidated Financial Statements under Item 8,
“Financial Statements and Supplementary Data.”
Subsequent Events
See Note 14 (Shareholders’ Equity) to our Consolidated Financial Statements under Item 8, “Financial Statements and
Supplementary Data.”
Obligations and Commitments
As of August 31, 2020, we had the following obligations and commitments to make future payments under contracts,
contractual obligations and commercial commitments:
Contractual Cash Obligations (1)
(in millions of U.S. dollars)
Long-term debt and related interest
Operating leases
Retirement obligations (2)
Purchase obligations and other commitments (3)
Payments due by period
Total
Less than
1 year
1-3 years
3-5 years
$
75 $
8 $
17 $
8 $
3,949
91
348
771
10
203
1,202
20
100
828
19
40
More than
5 years
43
1,149
42
5
Total
$
4,463 $
992 $
1,339 $
895 $
1,239
Amounts in table may not total due to rounding.
(1) The liability related to unrecognized tax benefits has been excluded from the contractual obligations table because a reasonable estimate of the
timing and amount of cash outflows from future tax settlements cannot be determined. For additional information, see Note 11 (Income Taxes) to
our Consolidated Financial Statements under Item 8, “Financial Statements and Supplementary Data.”
(2) Amounts represent projected payments under certain unfunded retirement plans for former pre-incorporation partners. Given these plans are
unfunded, we pay these benefits directly. These plans were eliminated for active partners after May 15, 2001.
(3) Other commitments include, among other things, information technology, software support and maintenance obligations, as well as other
obligations in the ordinary course of business that we cannot cancel or where we would be required to pay a termination fee in the event of
cancellation. Amounts shown do not include recourse that we may have to recover termination fees or penalties from clients.
Off-Balance Sheet Arrangements
In the normal course of business and in conjunction with some client engagements, we have entered into contractual
arrangements through which we may be obligated to indemnify clients with respect to certain matters. To date, we have not
been required to make any significant payment under any of these arrangements. For further discussion of these
transactions, see Note 15 (Commitments and Contingencies) to our Consolidated Financial Statements under Item 8,
“Financial Statements and Supplementary Data.”
New Accounting Pronouncements
See Note 1 (Summary of Significant Accounting Policies) to our Consolidated Financial Statements under Item 8, “Financial
Statements and Supplementary Data.”
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ACCENTURE 2020 FORM 10-K
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
38
Item 7A. Quantitative and Qualitative
Disclosures About Market Risk
All of our market risk sensitive instruments were entered into for purposes other than trading.
Foreign Currency Risk
We are exposed to foreign currency risk in the ordinary course of business. We hedge material cash flow exposures when
feasible using forward contracts. These instruments are subject to fluctuations in foreign currency exchange rates and credit
risk. Credit risk is managed through careful selection and ongoing evaluation of the financial institutions utilized as
counterparties.
Certain of these hedge positions are undesignated hedges of balance sheet exposures such as intercompany loans and
typically have maturities of less than one year. These hedges—primarily U.S. dollar/Euro, U.S. dollar/Japanese yen, U.S.
dollar/Indian rupee, U.S. dollar/Swiss franc, U.S. dollar/Australian dollar, U.S. dollar/U.K. pound, U.S. dollar/Philippine peso
and U.S. dollar/Singapore dollar—are intended to offset remeasurement of the underlying assets and liabilities. Changes in
the fair value of these derivatives are recorded in Other income (expense), net in the Consolidated Income Statements.
Additionally, we have hedge positions that are designated cash flow hedges of certain intercompany charges relating to our
global delivery model. These hedges—U.S. dollar/Indian rupee, U.S. dollar/Philippine peso, U.K. pound/Indian rupee, Euro/
Indian rupee, Australian dollar/Indian rupee and Japanese yen/Chinese yuan, which typically have maturities not exceeding
three years—are intended to partially offset the impact of foreign currency movements on future costs relating to our global
delivery resources. For additional information, see Note 9 (Financial Instruments) to our Consolidated Financial Statements
under Item 8, “Financial Statements and Supplementary Data.”
For designated cash flow hedges, gains and losses currently recorded in Accumulated other comprehensive loss are
expected to be reclassified into earnings at the time when certain anticipated intercompany charges are accrued as Cost of
services. As of August 31, 2020, it was anticipated that approximately $62 million of net gains, net of tax, currently recorded
in Accumulated other comprehensive loss will be reclassified into Cost of services within the next 12 months.
We use sensitivity analysis to determine the effects that market foreign currency exchange rate fluctuations may have on the
fair value of our hedge portfolio. The sensitivity of the hedge portfolio is computed based on the market value of future cash
flows as affected by changes in exchange rates. This sensitivity analysis represents the hypothetical changes in value of the
hedge position and does not reflect the offsetting gain or loss on the underlying exposure. A 10% change in the levels of
foreign currency exchange rates against the U.S. dollar (or other base currency of the hedge if not a U.S. dollar hedge) with
all other variables held constant would have resulted in a change in the fair value of our hedge instruments of approximately
$592 million and $509 million as of August 31, 2020 and 2019, respectively.
Interest Rate Risk
The interest rate risk associated with our borrowing and investing activities as of August 31, 2020 is not material in relation to
our consolidated financial position, results of operations or cash flows. While we may do so in the future, we have not used
derivative financial instruments to alter the interest rate characteristics of our investment holdings or debt instruments.
Equity Investment Risk
Our non-marketable and marketable equity securities are subject to a wide variety of market-related risks that could
substantially reduce or increase the fair value of our investments.
Our non-marketable equity securities are investments in privately held companies which are often in a start-up or
development stage, which is inherently risky. The technologies or products these companies have under development are
typically in the early stages and may never materialize, which could result in a loss of a substantial part of our investment in
these companies. The evaluation of privately held companies is based on information that we request from these companies,
which is not subject to the same disclosure regulations as U.S. publicly traded companies, and as such, the basis for these
evaluations is subject to the timing and accuracy of the data received from these companies. We have minimal exposure on
our long-term investments in privately held companies as these investments were not material in relation to our consolidated
financial position, results of operations or cash flows as of August 31, 2020.
Table of Contents
ACCENTURE 2020 FORM 10-K
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
39
We record our marketable equity securities not accounted for under the equity method at fair value based on readily
determinable market values.
The carrying values of our investments accounted for under the equity method generally do not fluctuate based on market
price changes, however these investments could be impaired if the carrying value exceeds the fair value.
Item 8. Financial Statements and
Supplementary Data
See the Index to Consolidated Financial Statements and financial statements commencing on page F-1, which are
incorporated herein by reference.
Item 9. Changes In and Disagreements With
Accountants On Accounting and Financial
Disclosure
None.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our principal executive officer and our principal financial officer, has evaluated the
effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of the end
of the period covered by this report. Any controls and procedures, no matter how well designed and operated, can provide
only reasonable assurance of achieving the desired control objectives. Based on that evaluation, the principal executive
officer and the principal financial officer of Accenture plc have concluded that, as of the end of the period covered by this
report, our disclosure controls and procedures were effective at the reasonable assurance level.
Management’s Annual Report on Internal Control over Financial
Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting to provide
reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles. Internal control over financial reporting
includes those policies and procedures that:
i.
pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and
dispositions of our assets;
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ACCENTURE 2020 FORM 10-K
Item 9A. Controls and Procedures
40
ii.
provide reasonable assurance that the transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are
being made only in accordance with authorizations of management and our Board of Directors; and
iii. provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of
our assets that could have a material effect on our financial statements.
Due to its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
due to changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Under the supervision and with the participation of our management, including our principal executive officer and principal
financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting using the
criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—
Integrated Framework (2013). Based on its evaluation, our management concluded that our internal control over financial
reporting was effective as of the end of the fiscal year covered by this Annual Report on Form 10-K.
KPMG LLP, an independent registered public accounting firm, has audited the Consolidated Financial Statements included in
this Annual Report on Form 10-K and, as part of their audit, has issued its attestation report, included herein, on the
effectiveness of our internal control over financial reporting. See “Report of Independent Registered Public Accounting Firm”
on page F-2.
Changes in Internal Control over Financial Reporting
There has been no change in our internal control over financial reporting that occurred during the fourth quarter of fiscal 2020
that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. Other Information
None.
Table of Contents
ACCENTURE 2020 FORM 10-K
Part III
Part III
41
Item 10. Directors, Executive Officers and
Corporate Governance
There have been no material changes to the procedures by which security holders may recommend nominees to our Board
of Directors from those described in the proxy statement for our 2020 Annual General Meeting of Shareholders filed with the
SEC on December 10, 2019.
Information about our executive officers is contained in the discussion entitled “Information about our Executive Officers” in
Part I of this Form 10-K. The remaining information called for by Item 10 will be included in the sections captioned
“Appointment of Directors,” “Corporate Governance” and “Beneficial Ownership” included in the definitive proxy statement
relating to the 2021 Annual General Meeting of Shareholders of Accenture plc to be held on February 3, 2021 and is
incorporated herein by reference. Accenture plc will file such definitive proxy statement with the SEC pursuant to Regulation
14A not later than 120 days after the end of our 2020 fiscal year covered by this Form 10-K.
Item 11. Executive Compensation
The information called for by Item 11 will be included in the sections captioned “Executive Compensation” and “Director
Compensation” included in the definitive proxy statement relating to the 2021 Annual General Meeting of Shareholders of
Accenture plc to be held on February 3, 2021 and is incorporated herein by reference. Accenture plc will file such definitive
proxy statement with the SEC pursuant to Regulation 14A not later than 120 days after the end of our 2020 fiscal year
covered by this Form 10-K.
Table of Contents
ACCENTURE 2020 FORM 10-K
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters
42
Item 12. Security Ownership of Certain
Beneficial Owners and Management and
Related Shareholder Matters
Securities Authorized for Issuance under Equity Compensation Plans
The following table sets forth, as of August 31, 2020, certain information related to our compensation plans under which
Accenture plc Class A ordinary shares may be issued.
Number of Shares to be
Issued Upon Exercise
of Outstanding Options,
Warrants and Rights
Weighted-Average
Exercise Price of
Outstanding Options,
Warrants and Rights (3)
Number of Shares Remaining
Available for Future Issuance
Under Equity Compensation
Plans (Excluding Securities
Reflected in 1st Column)
Plan Category
Equity compensation plans
approved by shareholders:
2001 Share Incentive Plan
Amended and Restated 2010
Share Incentive Plan
Amended and Restated 2010
Employee Share Purchase Plan
Equity compensation plans not
approved by shareholders
Total
(1) Consists of 50,340 restricted share units.
50,340 (1)
$
18,243,498 (2)
—
—
18,293,838
—
—
N/A
N/A
—
25,216,854
25,043,778
—
50,260,632
(2) Consists of 18,243,498 restricted share units, with performance-based awards assuming maximum performance.
(3) Restricted share units have no exercise price.
The remaining information called for by Item 12 will be included in the section captioned “Beneficial Ownership” included in
the definitive proxy statement relating to the 2021 Annual General Meeting of Shareholders of Accenture plc to be held on
February 3, 2021 and is incorporated herein by reference. Accenture plc will file such definitive proxy statement with the SEC
pursuant to Regulation 14A not later than 120 days after the end of our 2020 fiscal year covered by this Form 10-K.
Item 13. Certain Relationships and Related
Transactions, and Director Independence
The information called for by Item 13 will be included in the section captioned “Corporate Governance” included in the
definitive proxy statement relating to the 2021 Annual General Meeting of Shareholders of Accenture plc to be held on
February 3, 2021 and is incorporated herein by reference. Accenture plc will file such definitive proxy statement with the SEC
pursuant to Regulation 14A not later than 120 days after the end of our 2020 fiscal year covered by this Form 10-K.
Table of Contents
ACCENTURE 2020 FORM 10-K
Item 14. Principal Accountant Fees And Services
43
Item 14. Principal Accountant Fees And
Services
The information called for by Item 14 will be included in the section captioned “Audit Matters” included in the definitive proxy
statement relating to the 2021 Annual General Meeting of Shareholders of Accenture plc to be held on February 3, 2021 and
is incorporated herein by reference. Accenture plc will file such definitive proxy statement with the SEC pursuant to
Regulation 14A not later than 120 days after the end of our 2020 fiscal year covered by this Form 10-K.
Table of Contents
ACCENTURE 2020 FORM 10-K
Part IV
Part IV
44
Item 15. Exhibits, Financial Statement
Schedules
(a) List of documents filed as part of this report:
1. Financial Statements as of August 31, 2020 and August 31, 2019 and for the three years ended August 31, 2020—
Included in Part II of this Form 10-K:
Consolidated Balance Sheets
Consolidated Income Statements
Consolidated Statements of Comprehensive Income
Consolidated Shareholders’ Equity Statements
Consolidated Cash Flows Statements
Notes to Consolidated Financial Statements
2. Financial Statement Schedules:
None
3. Exhibit Index:
Exhibit
Number
3.1
3.2
4.1
10.1
10.2
10.3*
10.4
10.5*
10.6*
10.7*
10.8
10.9
Exhibit
Amended and Restated Memorandum and Articles of Association of Accenture plc (incorporated by reference to Exhibit 3.1 to Accenture
plc’s 8-K filed on February 7, 2018)
Certificate of Incorporation of Accenture plc (incorporated by reference to Exhibit 3.2 to Accenture plc’s 8-K12B filed on September 1, 2009
(the “8-K12B”))
Description of Accenture plc’s Securities (incorporated by reference to Exhibit 4.1 to Accenture plc’s 10-K filed on August 31, 2019 )
Form of Voting Agreement, dated as of April 18, 2001, among Accenture Ltd and the covered persons party thereto as amended and
restated as of February 3, 2005 (incorporated by reference to Exhibit 9.1 to the Accenture Ltd February 28, 2005 10-Q (File No.
001-16565))
Assumption Agreement of the Amended and Restated Voting Agreement, dated September 1, 2009 (incorporated by reference to Exhibit
10.4 to the 8-K12B)
Form of Non-Competition Agreement, dated as of April 18, 2001, among Accenture Ltd and certain employees (incorporated by reference
to Exhibit 10.2 to the Accenture Ltd Registration Statement on Form S-1 (File No. 333-59194) filed on April 19, 2001)
Assumption and General Amendment Agreement between Accenture plc and Accenture Ltd, dated September 1, 2009 (incorporated by
reference to Exhibit 10.1 to the 8-K12B)
2001 Share Incentive Plan (incorporated by reference to Exhibit 10.3 to the Accenture Ltd Registration Statement on Form S-1/A (File No.
333-59194) filed on July 12, 2001)
Amended and Restated Accenture plc 2010 Share Incentive Plan (incorporated by reference to Exhibit 10.1 to Accenture plc’s 8-K filed on
January 30, 2020)
Amended and Restated 2010 Employee Share Purchase Plan (incorporated by reference to Exhibit 10.2 to Accenture plc’s 8-K filed on
February 3, 2016)
Form of Support Agreement, dated as of May 23, 2001, between Accenture Ltd and Accenture Canada Holdings Inc. (incorporated by
reference to Exhibit 10.9 to the Accenture Ltd Registration Statement on Form S-1/A (the “July 2, 2001 Form S-1/A”))
First Supplemental Agreement to Support Agreement among Accenture plc, Accenture Ltd and Accenture Canada Holdings Inc., dated
September 1, 2009 (incorporated by reference to Exhibit 10.2 to the 8-K12B)
10.10*
Form of Employment Agreement of executive officers in the United States (incorporated by reference to Exhibit 10.3 to the February 28,
2013 10-Q)
Table of Contents
ACCENTURE 2020 FORM 10-K
45
10.11*
10.12*
10.13
10.14
10.15
10.16
10.17*
10.18*
10.19*
10.20*
10.21*
10.22*
10.23*
10.24*
10.25*
10.26*
10.27*
Form of Employment Agreement of executive officers in the United Kingdom (incorporated by reference to Exhibit 10.16 to the August 31,
2013 10-K)
Form of Employment Agreement of executive officers in Singapore (incorporated by reference to Exhibit 10.17 to the August 31, 2015 10-
K)
Form of Articles of Association of Accenture Canada Holdings Inc. (incorporated by reference to Exhibit 10.11 to the July 2, 2001 Form S-1/
A)
Articles of Amendment to Articles of Association of Accenture Canada Holdings Inc. (incorporated by reference to Exhibit 10.21 to the
August 31, 2013 10-K)
Form of Exchange Trust Agreement by and between Accenture Ltd and Accenture Canada Holdings Inc. and CIBC Mellon Trust Company,
made as of May 23, 2001 (incorporated by reference to Exhibit 10.12 to the July 2, 2001 Form S-1/A)
First Supplemental Agreement to Exchange Trust Agreement among Accenture plc, Accenture Ltd, Accenture Canada Holdings Inc. and
Accenture Inc., dated September 1, 2009 (incorporated by reference to Exhibit 10.3 to the 8-K12B)
Form of Key Executive Performance-Based Award Restricted Share Unit Agreement pursuant to the Amended and Restated Accenture plc
2010 Share Incentive Plan (incorporated by reference to Exhibit 10.2 to the February 28, 2019 10-Q)
Form of Key Executive Performance-Based Award Restricted Share Unit Agreement pursuant to the Amended and Restated Accenture plc
2010 Share Incentive Plan (incorporated by reference to Exhibit 10.2 to the February 29, 2020 10-Q)
Form of Accenture Leadership Performance Equity Award Restricted Share Unit Agreement pursuant to the Amended and Restated
Accenture plc 2010 Share Incentive Plan (incorporated by reference to Exhibit 10.4 to the February 28, 2018 10-Q)
Form of Accenture Leadership Performance Equity Award Restricted Share Unit Agreement pursuant to the Amended and Restated
Accenture plc 2010 Share Incentive Plan (incorporated by reference to Exhibit 10.3 to the February 28, 2019 10-Q)
Form of Accenture Leadership Performance Equity Award Restricted Share Unit Agreement pursuant to the Amended and Restated
Accenture plc 2010 Share Incentive Plan (incorporated by reference to Exhibit 10.3 to the February 29, 2020 10-Q)
Form of Voluntary Equity Investment Program Matching Grant Restricted Share Unit Agreement pursuant to the Amended and Restated
Accenture plc 2010 Share Incentive Plan (incorporated by reference to Exhibit 10.4 to the February 28, 2019 10-Q)
Form of Voluntary Equity Investment Program Matching Grant Restricted Share Unit Agreement pursuant to the Amended and Restated
Accenture plc 2010 Share Incentive Plan (incorporated by reference to Exhibit 10.4 to the February 29, 2020 10-Q)
Form of CEO Discretionary Grant Restricted Share Unit Agreement pursuant to the Amended and Restated Accenture plc 2010 Share
Incentive Plan (incorporated by reference to Exhibit 10.6 to the February 28, 2018 10-Q)
Form of CEO Discretionary Grant Restricted Share Unit Agreement pursuant to the Amended and Restated Accenture plc 2010 Share
Incentive Plan (incorporated by reference to Exhibit 10.5 to the February 28, 2019 10-Q)
Form of CEO Discretionary Grant Restricted Share Unit Agreement pursuant to the Amended and Restated Accenture plc 2010 Share
Incentive Plan (incorporated by reference to Exhibit 10.5 to the February 29, 2020 10-Q)
Form of Next Generation Leadership Performance-Based Award Restricted Share Unit Agreement pursuant to the Amended and Restated
Accenture plc 2010 Share Incentive Plan (incorporated by reference to Exhibit 10.6 to the February 29, 2020 10-Q)
10.28*
Accenture LLP Leadership Separation Benefits Plan (filed herewith)
10.29*
Description of Global Annual Bonus Plan (incorporated by reference to Exhibit 10.31 to the August 31, 2017 10-K)
10.30*
Form of Indemnification Agreement, between Accenture Inc. and the indemnitee party thereto (incorporated by reference to Exhibit 10.28
to the August 31, 2018 10-K)
21.1
23.1
23.2
24.1
31.1
31.2
32.1
32.2
99.1
Subsidiaries of the Registrant (filed herewith)
Consent of KPMG LLP (filed herewith)
Consent of KPMG LLP related to the Accenture plc 2010 Employee Share Purchase Plan (filed herewith)
Power of Attorney (included on the signature page hereto)
Certification of the Principal Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
Certification of the Principal Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
Certification of the Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002 (furnished herewith)
Certification of the Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002 (furnished herewith)
Amended and Restated Accenture plc 2010 Employee Share Purchase Plan Financial Statements (filed herewith)
Table of Contents
ACCENTURE 2020 FORM 10-K
46
101
104
The following financial information from Accenture plc’s Annual Report on Form 10-K for the fiscal year ended August 31, 2020, formatted
in Inline XBRL: (i) Consolidated Balance Sheets as of August 31, 2020 and August 31, 2019, (ii) Consolidated Income Statements for the
years ended August 31, 2020, 2019 and 2018, (iii) Consolidated Statements of Comprehensive Income for the years ended August 31,
2020, 2019 and 2018, (iv) Consolidated Shareholders’ Equity Statements for the years ended August 31, 2020, 2019 and 2018, (v)
Consolidated Cash Flows Statements for the years ended August 31, 2020, 2019 and 2018, and (vi) the Notes to Consolidated Financial
Statements
The cover page from Accenture plc’s Annual Report on Form 10-K for the year ended August 31, 2020, formatted in Inline XBRL (included
as Exhibit 101)
(*)
Indicates management contract or compensatory plan or arrangement.
The agreements and other documents filed as exhibits to this report are not intended to provide factual information or other
disclosure other than with respect to the terms of the agreements or other documents themselves, and you should not rely
on them for that purpose. In particular, any representations and warranties made by us in these agreements or other
documents were made solely within the specific context of the relevant agreement or document and may not describe the
actual state of affairs as of the date they were made or at any other time.
Item 16. Form 10-K Summary
Not applicable.
Table of Contents
ACCENTURE 2020 FORM 10-K
Signatures
47
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf on October 22, 2020 by the undersigned, thereunto duly authorized.
ACCENTURE PLC
By:
/s/ JULIE SWEET
Name: Julie Sweet
Title: Chief Executive Officer
Power of Attorney
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and
appoints Julie Sweet, KC McClure and Joel Unruch, and each of them, as his or her true and lawful attorneys-in-fact and
agents, with power to act with or without the others and with full power of substitution and resubstitution, to do any and all
acts and things and to execute any and all instruments which said attorneys and agents and each of them may deem
necessary or desirable to enable the registrant to comply with the U.S. Securities Exchange Act of 1934, as amended, and
any rules, regulations and requirements of the U.S. Securities and Exchange Commission thereunder in connection with the
registrant’s Annual Report on Form 10-K for the fiscal year ended August 31, 2020 (the “Annual Report”), including
specifically, but without limiting the generality of the foregoing, power and authority to sign the name of the registrant and the
name of the undersigned, individually and in his or her capacity as a director or officer of the registrant, to the Annual Report
as filed with the U.S. Securities and Exchange Commission, to any and all amendments thereto, and to any and all
instruments or documents filed as part thereof or in connection therewith; and each of the undersigned hereby ratifies and
confirms all that said attorneys and agents and each of them shall do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below on October 22, 2020
by the following persons on behalf of the registrant and in the capacities indicated.
Signature
Title
/s/ JULIE SWEET
Julie Sweet
/s/ KC MCCLURE
KC McClure
/s/ RICHARD P. CLARK
Richard P. Clark
/s/ DAVID P. ROWLAND
David P. Rowland
/s/ GILLES C. PÉLISSON
Gilles C. Pélisson
/s/ JAIME ARDILA
Jaime Ardila
Chief Executive Officer and Director
(principal executive officer)
Chief Financial Officer
(principal financial officer)
Chief Accounting Officer
(principal accounting officer)
Executive Chairman of the Board and Director
Lead Director
Director
Table of Contents
ACCENTURE 2020 FORM 10-K
Signatures
48
/s/ HERBERT HAINER
Herbert Hainer
/s/ NANCY MCKINSTRY
Nancy McKinstry
/s/ PAULA A. PRICE
Paula A. Price
/s/ VENKATA S.M. RENDUCHINTALA
Venkata S.M. Renduchintala
/s/ ARUN SARIN
Arun Sarin
/s/ FRANK K. TANG
Frank K. Tang
/s/ TRACEY T. TRAVIS
Tracey T. Travis
Director
Director
Director
Director
Director
Director
Director
Table of Contents
ACCENTURE 2020 FORM 10-K
Index To Consolidated Financial Statements
F-1
Accenture Plc
Index To Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm
Consolidated Financial Statements as of August 31, 2020 and 2019 and for the years ended August 31, 2020,
2019 and 2018:
Consolidated Balance Sheets
Consolidated Income Statements
Consolidated Statements of Comprehensive Income
Consolidated Shareholders’ Equity Statements
Consolidated Cash Flows Statements
Notes to Consolidated Financial Statements
Page
F-2
F-5
F-6
F-7
F-8
F-11
F-12
1
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ACCENTURE 2020 FORM 10-K
Report of Independent Registered Public Accounting Firm
F-2
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors
Accenture plc:
Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting
We have audited the accompanying consolidated balance sheets of Accenture plc (and subsidiaries) (the Company) as of
August 31, 2020 and 2019, the related consolidated statements of income, comprehensive income, shareholders’ equity, and
cash flows for each of the years in the three-year period ended August 31, 2020, and the related notes (collectively, the
consolidated financial statements). We also have audited the Company’s internal control over financial reporting as of August
31, 2020, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial
position of the Company as of August 31, 2020 and 2019, and the results of its operations and its cash flows for each of the
years in the three-year period ended August 31, 2020, in conformity with U.S. generally accepted accounting principles. Also
in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of
August 31, 2020 based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission.
Change in Accounting Principle
As discussed in Note 1 to the consolidated financial statements, the Company changed its method of accounting for leases
effective September 1, 2019 due to the adoption of Accounting Standard Update (ASU) No. 2016-02, Leases, and related
updates, which established Accounting Standard Codification Topic 842, Leases.
Basis for Opinions
The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal
control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting,
included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting appearing under
Item 9A. Our responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on
the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with
the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect
to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities
and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform
the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material
misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in
all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material
misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and
significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial
statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over
financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating
effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as
we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
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ACCENTURE 2020 FORM 10-K
Report of Independent Registered Public Accounting Firm
F-3
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial
statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts
or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging,
subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the
consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below,
providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Estimated costs to complete certain technology integration consulting services contracts
As discussed in Notes 1 and 2 to the consolidated financial statements, revenues from contracts for technology
integration consulting services where the Company designs, builds, and implements new or enhanced system
applications and related processes for its clients are recognized over time since control of the system is transferred
continuously to the client. Generally, revenue is recognized using costs incurred to date relative to total estimated costs
at completion to measure progress toward satisfying the Company’s performance obligations, which typically occurs
over time periods ranging from six months to two years.
We identified the evaluation of estimated costs to complete certain technology integration consulting services contracts
as a critical audit matter. Subjective auditor judgment was required to evaluate the estimate of costs to complete the
contracts.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design
and tested the operating effectiveness of certain internal controls over the Company’s process for estimating costs to
complete technology integration consulting services contracts, including controls over the estimate of costs to complete
the contracts. We tested the estimated costs to complete for certain technology integration consulting services contracts
by evaluating:
•
•
•
•
the scope of the work and timing of delivery for consistency with the underlying contractual terms;
the estimated costs to complete in relation to progress toward satisfying the Company's performance obligations,
based on internal and customer-facing information;
changes to estimated costs, if any, including the amount and timing of the change based on internal information or
contractual changes; and
actual costs incurred subsequent to the balance sheet date to assess if they were consistent with the estimate for
that time period.
We evaluated the Company’s ability to estimate costs by comparing estimates developed at contract inception to actual
costs ultimately incurred to satisfy the performance obligation.
Unrecognized tax benefits
As discussed in Note 11 to the consolidated financial statements, the Company has $1,239 million of unrecognized tax
benefits as of August 31, 2020. As discussed in Note 1 to the consolidated financial statements, the Company
recognizes tax positions when it believes such positions are more likely than not of being sustained if challenged.
Recognized tax positions are measured at the largest amount of benefit greater than 50 percent likely of being realized.
The Company uses estimates and assumptions in determining the amount of unrecognized tax benefits.
We identified the evaluation of the Company’s unrecognized tax benefits related to transfer pricing and certain other
intercompany transactions as a critical audit matter. Complex auditor judgment was required in evaluating the
Company’s interpretation of tax law and its analysis of the recognition and measurement of its tax positions.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design
and tested the operating effectiveness of certain internal controls over the Company’s unrecognized tax benefits
process, including controls over transfer pricing and certain other intercompany transactions. We involved tax and
transfer pricing professionals with specialized skills and knowledge, who assisted in:
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ACCENTURE 2020 FORM 10-K
Report of Independent Registered Public Accounting Firm
F-4
•
•
•
•
•
evaluating the Company’s interpretation of tax laws and income tax consequences of intercompany transactions,
including internal restructurings and intra-entity transfers of assets;
assessing transfer pricing studies for compliance with applicable laws and regulations;
analyzing the Company’s tax positions, including the methodology over the measurement of unrecognized tax
benefits related to transfer pricing;
evaluating the Company’s determination of unrecognized tax benefits, including the associated effect in other
jurisdictions; and
inspecting settlements with applicable taxing authorities.
In addition, we evaluated the Company’s ability to estimate its unrecognized tax benefits by comparing historical
unrecognized tax benefits to actual results upon the conclusion of examinations by applicable taxing authorities.
/s/ KPMG LLP
We have served as the Company’s auditor since 2002.
Chicago, Illinois
October 22, 2020
Table of Contents
ACCENTURE 2020 FORM 10-K
Consolidated Financial Statements
(In thousands of U.S. dollars, except share and per share amounts)
F-5
Consolidated Balance Sheets
August 31, 2020 and 2019
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
Short-term investments
Receivables and contract assets
Other current assets
Total current assets
NON-CURRENT ASSETS:
Contract assets
Investments
Property and equipment, net
Lease assets
Goodwill
Deferred contract costs
Deferred tax assets
Other non-current assets
Total non-current assets
TOTAL ASSETS
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt and bank borrowings
Accounts payable
Deferred revenues
Accrued payroll and related benefits
Income taxes payable
Lease liabilities
Accrued consumption taxes
Other accrued liabilities
Total current liabilities
NON-CURRENT LIABILITIES:
Long-term debt
Deferred revenues
Retirement obligation
Deferred tax liabilities
Income taxes payable
Lease liabilities
Other non-current liabilities
Total non-current liabilities
SHAREHOLDERS’ EQUITY:
Ordinary shares, par value 1.00 euros per share, 40,000 shares authorized and issued as of
August 31, 2020 and August 31, 2019
Class A ordinary shares, par value $0.0000225 per share, 20,000,000,000 shares authorized,
658,548,895 and 654,739,267 shares issued as of August 31, 2020 and August 31, 2019,
respectively
Class X ordinary shares, par value $0.0000225 per share, 1,000,000,000 shares authorized,
527,509 and 609,404 shares issued and outstanding as of August 31, 2020 and August 31,
2019, respectively
Restricted share units
Additional paid-in capital
Treasury shares, at cost: Ordinary, 40,000 shares as of August 31, 2020 and August 31, 2019;
Class A ordinary, 24,383,369 and 18,964,863 shares as of August 31, 2020 and August 31,
2019, respectively
Retained earnings
Accumulated other comprehensive loss
Total Accenture plc shareholders’ equity
Noncontrolling interests
Total shareholders’ equity
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
The accompanying Notes are an integral part of these Consolidated Financial Statements.
August 31,
2020
August 31,
2019
$ 8,415,330 $ 6,126,853
3,313
8,095,071
1,225,364
15,450,601
94,309
7,846,892
1,393,225
17,749,756
71,002
43,257
240,313
324,514
1,391,166
1,545,568
—
3,183,346
6,205,550
7,709,820
681,492
723,168
4,349,464
4,153,146
1,400,292
1,646,018
19,328,837
14,339,279
$ 37,078,593 $ 29,789,880
7,820 $
$
1,349,874
3,636,741
5,083,950
453,542
756,057
662,409
712,197
12,662,590
6,411
1,646,641
3,188,835
4,890,542
378,017
—
446,699
504,751
11,061,896
54,052
690,931
1,859,444
179,703
930,695
2,667,584
534,421
6,916,830
16,247
565,224
1,765,914
133,232
892,688
—
526,988
3,900,293
57
15
57
15
—
1,585,302
7,167,227
—
1,411,903
5,804,448
(2,565,761) (1,388,376)
10,421,538
12,375,533
(1,561,837) (1,840,577)
14,409,008
17,000,536
418,683
498,637
14,827,691
17,499,173
$ 37,078,593 $ 29,789,880
Table of Contents
ACCENTURE 2020 FORM 10-K
Consolidated Financial Statements
(In thousands of U.S. dollars, except share and per share amounts)
F-6
Consolidated Income Statements
For the Years Ended August 31, 2020, 2019 and 2018
REVENUES:
Revenues
OPERATING EXPENSES:
Cost of services
Sales and marketing
General and administrative costs
Total operating expenses
OPERATING INCOME
Interest income
Interest expense
Other income (expense), net
INCOME BEFORE INCOME TAXES
Income tax expense
NET INCOME
2020
2019
2018
$ 44,327,039 $ 43,215,013 $ 40,992,534
30,350,881
29,900,325
28,499,170
4,625,929
2,836,585
4,447,456
2,562,158
4,196,201
2,398,384
37,813,395
36,909,939
35,093,755
6,513,644
6,305,074
5,898,779
69,331
(33,071)
224,427
6,774,331
1,589,018
5,185,313
87,508
(22,963)
56,337
(19,539)
(117,822)
(127,484)
6,251,797
1,405,556
4,846,241
5,808,093
1,593,499
4,214,594
Net income attributable to noncontrolling interests in Accenture Holdings plc and
Accenture Canada Holdings Inc.
Net income attributable to noncontrolling interests – other
(6,325)
(71,149)
(6,694)
(60,435)
(95,063)
(59,624)
NET INCOME ATTRIBUTABLE TO ACCENTURE PLC
$ 5,107,839 $ 4,779,112 $ 4,059,907
Weighted average Class A ordinary shares:
Basic
Diluted
Earnings per Class A ordinary share:
Basic
Diluted
Cash dividends per share
636,299,913
638,098,125
628,451,742
647,797,003
650,204,873
655,296,150
$
$
$
8.03 $
7.89 $
3.20 $
7.49 $
7.36 $
2.92 $
6.46
6.34
2.66
The accompanying Notes are an integral part of these Consolidated Financial Statements.
Table of Contents
ACCENTURE 2020 FORM 10-K
Consolidated Financial Statements
(In thousands of U.S. dollars)
F-7
Consolidated Statements Of Comprehensive Income
For the Years Ended August 31, 2020, 2019 and 2018
NET INCOME
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:
Foreign currency translation
Defined benefit plans
Cash flow hedges
Investments
2020
2019
2018
$ 5,185,313 $ 4,846,241 $ 4,214,594
197,696
(132,707)
(305,225)
57,100
24,721
(253,039)
21,335
123,003
(198,645)
(777)
(1,663)
1,148
OTHER COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO ACCENTURE PLC
Other comprehensive income (loss) attributable to noncontrolling interests
278,740
(264,406)
(481,387)
8,243
(6,749)
(2,233)
COMPREHENSIVE INCOME
$ 5,472,296 $ 4,575,086 $ 3,730,974
COMPREHENSIVE INCOME ATTRIBUTABLE TO ACCENTURE PLC
$ 5,386,579 $ 4,514,706 $ 3,578,520
Comprehensive income attributable to noncontrolling interests
COMPREHENSIVE INCOME
85,717
152,454
$ 5,472,296 $ 4,575,086 $ 3,730,974
60,380
The accompanying Notes are an integral part of these Consolidated Financial Statements.
Table of Contents
ACCENTURE 2020 FORM 10-K
Consolidated Financial Statements
(In thousands of U.S. dollars and share amounts)
Consolidated Shareholders’ Equity Statements
For the Years Ended August 31, 2020, 2019 and 2018
F-8
Ordinary
Shares
Class A
Ordinary
Shares
Class X
Ordinary
Shares
No.
Shares
$
$
No.
Shares
No.
Shares
$
Restricted
Share
Units
Additional
Paid-in
Capital
Treasury Shares
$
No.
Shares
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
Total
Accenture plc
Shareholders’
Equity
Noncontrolling
Interests
Total
Shareholders’
Equity
Balance as of August 31, 2017
$ 57
40 $ 14
638,966 $ —
20,531 $ 1,095,026 $ 3,516,399 $ (1,649,090)
(23,449) $ 7,081,855 $
(1,094,784) $
8,949,477 $
760,723 $
9,710,200
Net income
Other comprehensive income
(loss)
Purchases of Class A ordinary
shares
Cancellation of treasury shares
Share-based compensation
expense
Purchases/redemptions of
Accenture Holdings plc
ordinary shares, Accenture
Canada Holdings Inc.
exchangeable shares and
Class X ordinary shares
Issuances of Class A ordinary
shares:
Employee share programs
Upon redemption of
Accenture Holdings plc
ordinary shares
Dividends
Other, net
4,059,907
4,059,907
154,687
4,214,594
(481,387)
(481,387)
(2,233)
(483,620)
49,766
(2,554,084)
(16,706)
(2,504,318)
(49,766)
(2,554,084)
(11,621)
(206,782)
1,582,067
11,621
(1,375,285)
913,801
63,107
(821)
(80,169)
—
976,908
—
976,908
(80,169)
(4,841)
(85,010)
10,077
25,906
1
(829,085)
1,132,024
504,159
4,201
(68,656)
(19,054)
408,652
738,442
408,653
14,704
(408,653)
753,146
—
54,881
(12,233)
(1,725,953)
(19,455)
(1,671,072)
(31,688)
(37,652)
(67,134)
(1,708,724)
(98,822)
Balance as of August 31, 2018
$ 57
40 $ 15
663,328 $ —
656 $ 1,234,623 $ 4,870,764 $ (2,116,948)
(24,333) $ 7,952,413 $
(1,576,171) $
10,364,753 $
359,835 $
10,724,588
The accompanying Notes are an integral part of these Consolidated Financial Statements.
Table of Contents
ACCENTURE 2020 FORM 10-K
Consolidated Financial Statements
(In thousands of U.S. dollars and share amounts)
Consolidated Shareholders’ Equity Statements — (continued)
For the Years Ended August 31, 2020, 2019 and 2018
F-9
Ordinary
Shares
Class A
Ordinary
Shares
Class X
Ordinary
Shares
No.
Shares
$
$
No.
Shares
No.
Shares
$
Restricted
Share
Units
Additional
Paid-in
Capital
Treasury Shares
$
No.
Shares
Retained
Earnings
2,134,818
4,779,112
Accumulated
Other
Comprehensive
Loss
Total
Accenture plc
Shareholders’
Equity
Noncontrolling
Interests
Total
Shareholders’
Equity
2,134,818
4,779,112
3,158
67,129
2,137,976
4,846,241
(264,406)
(264,406)
(6,749)
(271,155)
3,302
(2,669,336)
(16,431)
(2,666,034)
(3,302)
(2,669,336)
(17,599)
(326,092)
2,745,321
17,599
(2,419,229)
1,023,794
69,459
(47)
(21,768)
—
1,093,253
—
1,093,253
(21,768)
(10)
(21,778)
9,010
(903,526)
1,219,600
652,587
4,160
(121,250)
847,411
1,034
848,445
57,012
(10,817)
(1,918,737)
14,411
(1,861,725)
(2,628)
(1,864,353)
3,594
216
3,810
Cumulative effect adjustment
Net income
Other comprehensive income
(loss)
Purchases of Class A shares
Cancellation of treasury shares
Share-based compensation
expense
Purchases/redemptions of
Accenture Canada Holdings
Inc. exchangeable shares and
Class X shares
Issuances of Class A shares for
employee share programs
Dividends
Other, net
Balance as of August 31, 2019
$ 57
40 $ 15
654,739 $ —
609 $ 1,411,903 $ 5,804,448 $ (1,388,376)
(19,005) $ 10,421,538 $
(1,840,577) $
14,409,008 $
418,683 $
14,827,691
The accompanying Notes are an integral part of these Consolidated Financial Statements.
Table of Contents
ACCENTURE 2020 FORM 10-K
Consolidated Financial Statements
(In thousands of U.S. dollars and share amounts)
Consolidated Shareholders’ Equity Statements — (continued)
For the Years Ended August 31, 2020, 2019 and 2018
F-10
Ordinary
Shares
Class A
Ordinary
Shares
Class X
Ordinary
Shares
No.
Shares
$
$
No.
Shares
No.
Shares
$
Restricted
Share
Units
Additional
Paid-in
Capital
Treasury Shares
$
No.
Shares
Retained
Earnings
5,107,839
Accumulated
Other
Comprehensive
Loss
Total
Accenture plc
Shareholders’
Equity
Noncontrolling
Interests
Total
Shareholders’
Equity
5,107,839
278,740
278,740
77,474
8,243
5,185,313
286,983
3,116
(2,894,253)
(14,730)
(2,891,137)
(3,116)
(2,894,253)
(5,526)
(108,670)
1,056,145
5,526
(947,475)
1,118,284
79,522
(81)
(21,594)
—
1,197,806
(21,594)
—
1,197,806
(21,594)
9,336
(1,022,144)
1,409,627
660,723
3,786
(93,912)
954,294
1,014
955,308
77,259
(2,112,457)
778
(2,035,198)
778
(2,535)
(1,126)
(2,037,733)
(348)
Net income
Other comprehensive income
(loss)
Purchases of Class A shares
Cancellation of treasury shares
Share-based compensation
expense
Purchases/redemptions of
Accenture Canada Holdings
Inc. exchangeable shares and
Class X shares
Issuances of Class A shares for
employee share programs
Dividends
Other, net
Balance as of August 31, 2020
$ 57
40 $ 15
658,549 $ —
528 $ 1,585,302 $ 7,167,227 $ (2,565,761)
(24,423) $ 12,375,533 $
(1,561,837) $
17,000,536 $
498,637 $
17,499,173
The accompanying Notes are an integral part of these Consolidated Financial Statements.
Table of Contents
ACCENTURE 2020 FORM 10-K
Consolidated Financial Statements
(In thousands of U.S. dollars)
F-11
Consolidated Cash Flows Statements
For the Years Ended August 31, 2020, 2019 and 2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income
Adjustments to reconcile Net income to Net cash provided by (used in)
operating activities—
Depreciation, amortization and other
Share-based compensation expense
Deferred tax expense (benefit)
Other, net
Change in assets and liabilities, net of acquisitions—
Receivables and contract assets, current and non-current
Other current and non-current assets
Accounts payable
Deferred revenues, current and non-current
Accrued payroll and related benefits
Income taxes payable, current and non-current
Other current and non-current liabilities
2020
2019
2018
$ 5,185,313 $ 4,846,241 $
4,214,594
1,773,124
1,197,806
170,951
(243,867)
892,760
1,093,253
(96,360)
(87,522)
926,776
976,908
94,000
7,609
721,500
(526,297)
(710,804)
(503,482)
(489,817)
(510,102)
(359,682)
236,207
(7,845)
55,198
(10,071)
177,186
258,067
386,930
(162,916)
335,428
(167,971)
176,853
646,416
183,933
188,479
Net cash provided by (used in) operating activities
8,215,152
6,626,953
6,026,691
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment
Purchases of businesses and investments, net of cash acquired
Proceeds from sales of businesses and investments
Other investing, net
(599,132)
(599,009)
(619,187)
(1,531,599)
(1,193,071)
(657,546)
230,393
5,819
27,951
8,553
20,197
6,932
Net cash provided by (used in) investing activities
(1,894,519)
(1,755,576)
(1,249,604)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of shares
Purchases of shares
Proceeds from (repayments of) long-term debt, net
Cash dividends paid
Other, net
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS, beginning of period
CASH AND CASH EQUIVALENTS, end of period
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid
Income taxes paid, net
955,308
848,445
753,146
(2,915,847)
(2,691,114)
(2,639,094)
(6,719)
(4,772)
(4,195)
(2,037,733)
(1,864,353)
(1,708,724)
(44,101)
(55,377)
(110,161)
(4,049,092)
16,936
(3,767,171)
(38,713)
(3,709,028)
(133,559)
2,288,477
6,126,853
1,065,493
5,061,360
934,500
4,126,860
$ 8,415,330 $ 6,126,853 $
5,061,360
$
28,493 $
22,624 $
19,673
$ 1,360,030 $ 1,587,273 $
1,373,244
The accompanying Notes are an integral part of these Consolidated Financial Statements.
Table of Contents
ACCENTURE 2020 FORM 10-K
Notes To Consolidated Financial Statements
(In thousands of U.S. dollars, except share and per share amounts or as otherwise disclosed)
F-12
1. Summary of Significant Accounting Policies
Description of Business
Accenture plc is a leading global professional services company, providing a broad range of services in strategy and
consulting, interactive, technology and operations. We serve clients in three geographic markets: North America, Europe and
Growth Markets (Asia Pacific, Latin America, Africa and the Middle East). Our geographic markets bring together capabilities
from across the organization, with digital skills and industry and functional expertise throughout, to deliver tangible value to
our clients.
Basis of Presentation
The Consolidated Financial Statements include the accounts of Accenture plc, an Irish company, and our controlled
subsidiary companies. Accenture plc is an Irish public limited company, which operates its business through its subsidiaries.
Prior to March 13, 2018, Accenture plc’s only business was to hold ordinary and deferred shares in, and to act as the
controlling shareholder of, its subsidiary, Accenture Holdings plc, an Irish public limited company. We operated our business
through Accenture Holdings plc and subsidiaries of Accenture Holdings plc. Accenture plc controlled Accenture Holdings plc’s
management and operations and consolidated Accenture Holdings plc’s results in our Consolidated Financial Statements.
On March 13, 2018, Accenture Holdings plc merged with and into Accenture plc, with Accenture plc as the surviving entity. As
a result, all of the assets and liabilities of Accenture Holdings plc were acquired by Accenture plc, and Accenture Holdings plc
ceased to exist. In connection with this internal merger, shareholders of Accenture Holdings plc (other than Accenture entities
that held shares of Accenture Holdings plc), who primarily consisted of current and former members of Accenture Leadership
and their permitted transferees, received one Class A ordinary share of Accenture plc for each share of Accenture Holdings
plc that they owned, and Accenture plc redeemed all Class X ordinary shares of Accenture plc owned by such shareholders.
The shares of Accenture Holdings plc (for applicable periods) and Accenture Canada Holdings Inc. held by persons other
than us are treated as a noncontrolling interest in the Consolidated Financial Statements. The noncontrolling interest
percentage was less than 1% as of August 31, 2020 and 2019, respectively.
All references to years, unless otherwise noted, refer to our fiscal year, which ends on August 31. For example, a reference
to “fiscal 2020” means the 12-month period that ended on August 31, 2020. All references to quarters, unless otherwise
noted, refer to the quarters of our fiscal year.
The preparation of the Consolidated Financial Statements in conformity with U.S. generally accepted accounting principles
requires management to make estimates and assumptions that affect amounts reported in the Consolidated Financial
Statements and accompanying disclosures. Although these estimates are based on management’s best knowledge of
current events and actions that we may undertake in the future, actual results may be different from those estimates.
Effective March 1, 2020, we began managing our business under a new growth model through our three geographic
markets, North America, Europe and Growth Markets, which became our reportable segments in the third quarter of fiscal
2020. Prior to this change, our reportable segments were our five industry groups, Communications, Media & Technology,
Financial Services, Health & Public Service, Products and Resources. See Note 7 (Goodwill and Intangible Assets) and Note
16 (Segment Reporting) to these Consolidated Financial Statements for further details regarding the change in our reportable
segments.
Revenue Recognition
We account for revenue in accordance with FASB ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606),
which we adopted on September 1, 2018 using the modified retrospective method.
Table of Contents
ACCENTURE 2020 FORM 10-K
Notes To Consolidated Financial Statements — (continued)
(In thousands of U.S. dollars, except share and per share amounts or as otherwise disclosed)
F-13
Performance Obligations
A performance obligation is a promise in a contract to transfer a distinct good or service to the client and is the unit of
accounting in Topic 606. A contract’s transaction price is allocated to each distinct performance obligation and recognized as
revenue when, or as, the performance obligation is satisfied. For contracts with multiple performance obligations, we allocate
the contract’s transaction price to each performance obligation based on the relative standalone selling price. The primary
method used to estimate standalone selling price is the expected cost plus a margin approach, under which we forecast our
expected costs of satisfying a performance obligation and then add an appropriate margin for that distinct good or service
based on margins for similar services sold on a standalone basis. While determining relative standalone selling price and
identifying separate performance obligations require judgment, generally relative standalone selling prices and the separate
performance obligations are readily identifiable as we sell those performance obligations unaccompanied by other
performance obligations. Contract modifications are routine in the performance of our contracts. Contracts are often modified
to account for changes in the contract specifications, requirements or duration. If a contract modification results in the
addition of performance obligations priced at a standalone selling price or if the post-modification services are distinct from
the services provided prior to the modification, the modification is accounted for separately. If the modified services are not
distinct, they are accounted for as part of the existing contract.
Our revenues are derived from contracts for outsourcing services, technology integration consulting services and non-
technology integration consulting services. These contracts have different terms based on the scope, performance
obligations and complexity of the engagement, which frequently require us to make judgments and estimates in recognizing
revenues. We have many types of contracts, including time-and-materials contracts, fixed-price contracts, fee-per-transaction
contracts and contracts with multiple fee types.
The nature of our contracts gives rise to several types of variable consideration, including incentive fees. Many contracts
include incentives or penalties related to costs incurred, benefits produced or adherence to schedules that may increase the
variability in revenues and margins earned on such contracts. These variable amounts generally are awarded or refunded
upon achievement of or failure to achieve certain performance metrics, milestones or cost targets and can be based upon
client discretion. We include these variable fees in the estimated transaction price when there is a basis to reasonably
estimate the amount of the fee and it is not probable a significant reversal of revenue will occur. These estimates reflect the
expected value of the variable fee and are based on an assessment of our anticipated performance, historical experience
and other information available at the time.
Our performance obligations are satisfied over time as work progresses or at a point in time. The majority of our revenues
are recognized over time based on the extent of progress towards satisfying our performance obligations. The selection of
the method to measure progress towards completion requires judgment and is based on the contract and the nature of the
services to be provided.
Outsourcing Contracts
Our outsourcing contracts typically span several years. Revenues are generally recognized on outsourcing contracts over
time because our clients benefit from the services as they are performed. Outsourcing contracts require us to provide a
series of distinct services each period over the contract term. Revenues from unit-priced contracts are recognized as
transactions are processed. When contractual billings represent an amount that corresponds directly with the value provided
to the client (e.g., time-and-materials contracts), revenues are recognized as amounts become billable in accordance with
contract terms.
Technology Integration Consulting Services
Revenues from contracts for technology integration consulting services where we design/redesign, build and implement new
or enhanced systems and related processes for our clients are recognized over time as control of the system is transferred
continuously to the client. Contracts for technology integration consulting services generally span six months to two years.
Generally, revenue, including estimated fees, is recognized using costs incurred to date relative to total estimated costs at
completion to measure progress toward satisfying our performance obligations. Incurred cost represents work performed,
which corresponds with, and thereby best depicts, the transfer of control to the client.
Table of Contents
ACCENTURE 2020 FORM 10-K
Notes To Consolidated Financial Statements — (continued)
(In thousands of U.S. dollars, except share and per share amounts or as otherwise disclosed)
F-14
Non-Technology Integration Consulting Services
Our contracts for non-technology integration consulting services are typically less than a year in duration. Revenues are
generally recognized over time as our clients benefit from the services as they are performed, or the contract, for which the
related services lack an alternative use, includes termination provisions enabling payment for performance completed to
date. When contractual billings represent an amount that corresponds directly with the value provided to the client (e.g. time-
and-materials contracts), revenues are recognized as amounts become billable in accordance with contract terms. Revenues
from fixed-price contracts are generally recognized using costs incurred to date relative to total estimated costs at completion
to measure progress toward satisfying our performance obligations. Incurred cost represents work performed, which
corresponds with, and thereby best depicts, the transfer of control to the client. For non-technology integration consulting
contracts which do not qualify to recognize revenue over time, we recognize revenues at a point in time when the client
obtains control of the promised good or service.
Contract Estimates
Estimates of total contract revenues and costs are continuously monitored over the lives of our contracts, and recorded
revenues and cost estimates are subject to revision as the contract progresses. If at any time the estimate of contract
profitability indicates an anticipated loss on a technology integration consulting contract, we recognize the loss in the quarter
it first becomes probable and reasonably estimable.
Contract Balances
The timing of revenue recognition, billings and cash collections results in Receivables, Contract assets, and Deferred
revenues (Contract liabilities) on our Consolidated Balance Sheet. Amounts are billed as work progresses in accordance with
agreed-upon contractual terms, either at periodic intervals (e.g., monthly or quarterly) or upon achievement of contractual
milestones. Our receivables are rights to consideration that are conditional only upon the passage of time as compared to
our contract assets, which are rights to consideration conditional upon additional factors. When we bill or receive payments
from our clients before revenue is recognized, we record Contract liabilities. Contract assets and liabilities are reported on
our Consolidated Balance Sheet on a contract-by-contract basis at the end of each reporting period.
For some outsourcing contracts, we receive payments for transition or set-up activities, which are deferred and recognized
as revenue as the services are provided. These advance payments are typically not a significant financing component
because they are used to meet working capital demands in the early stages of a contract and to protect us from the other
party failing to complete its obligations under the contract. We elected the practical expedient to report revenues net of any
revenue-based taxes assessed by governmental authorities that are imposed on and concurrent with specific revenue-
producing transactions.
Employee Share-Based Compensation Arrangements
Share-based compensation expense is recognized over the requisite service period for awards of equity instruments to
employees based on the grant date fair value of those awards expected to ultimately vest. Forfeitures are estimated on the
date of grant and revised if actual or expected forfeiture activity differs materially from original estimates.
Income Taxes
We calculate and provide for income taxes in each of the tax jurisdictions in which we operate. Deferred tax assets and
liabilities, measured using enacted tax rates, are recognized for the future tax consequences of temporary differences
between the tax and financial statement bases of assets and liabilities. A valuation allowance reduces the deferred tax assets
to the amount that is more likely than not to be realized. We establish liabilities or reduce assets when we believe tax
positions are not more likely than not of being sustained if challenged. Recognized tax positions are measured at the largest
amount of benefit greater than 50 percent likely of being realized. Each fiscal quarter, we evaluate tax positions and adjust
the related tax assets and liabilities in light of changing facts and circumstances. We release stranded tax effects from
Accumulated other comprehensive loss using the specific identification approach for our defined benefit plans and the
portfolio approach for other items.
Table of Contents
ACCENTURE 2020 FORM 10-K
Notes To Consolidated Financial Statements — (continued)
(In thousands of U.S. dollars, except share and per share amounts or as otherwise disclosed)
F-15
Translation of Non-U.S. Currency Amounts
Assets and liabilities of non-U.S. subsidiaries whose functional currency is not the U.S. dollar are translated into U.S. dollars
at fiscal year-end exchange rates. Revenue and expense items are translated at average foreign currency exchange rates
prevailing during the fiscal year. Translation adjustments are included in Accumulated other comprehensive loss. Gains and
losses arising from intercompany foreign currency transactions that are of a long-term investment nature are reported in the
same manner as translation adjustments.
Cash and Cash Equivalents
Cash and cash equivalents consist of all cash balances and liquid investments with original maturities of three months or
less, including certificates of deposit and time deposits. As a result of certain subsidiaries’ cash management systems,
checks issued but not presented to the banks for payment may create negative book cash balances. Such negative balances
are classified as Current portion of long term debt and bank borrowings.
Allowances for Client Receivables
We record our client receivables at their face amounts less allowances. On a periodic basis, we evaluate our receivables and
establish allowances based on historical experience and other currently available information. As of August 31, 2020 and
2019, total allowances recorded for client receivables were $40,277 and $45,538, respectively. The allowance reflects our
best estimate of collectibility risks on outstanding receivables. In limited circumstances, we agree to extend financing to
certain clients. The terms vary by contract, but generally payment for services is contractually linked to the achievement of
specified performance milestones.
Concentrations of Credit Risk
Our financial instruments, consisting primarily of cash and cash equivalents, foreign currency exchange rate instruments and
client receivables, are exposed to concentrations of credit risk. We place our cash and cash equivalents and foreign
exchange instruments with highly-rated financial institutions, limit the amount of credit exposure with any one financial
institution and conduct ongoing evaluations of the credit worthiness of the financial institutions with which we do business.
Client receivables are dispersed across many different industries and countries; therefore, concentrations of credit risk are
limited.
Investments
All available-for-sale securities and liquid investments with an original maturity greater than three months but less than one
year are considered to be Short-term investments. Non-current investments consist of equity securities in publicly-traded and
privately-held companies and are accounted for using either the equity or fair value measurement alternative method of
accounting (for investments without readily determinable fair values). Investments are periodically assessed for other-than-
temporary impairment. If an investment is deemed to have experienced an other-than-temporary decline below its cost basis,
we reduce the carrying amount of the investment to its estimated fair value.
Our non-current investments are as follows:
Equity method investments
Investments without readily determinable fair values
Total non-current investments
August 31, 2020 August 31, 2019
$
$
240,446 $
84,068
324,514 $
108,342
131,971
240,313
For investments in which we can exercise significant influence but do not control, we use the equity method of accounting.
Equity method investments are initially recorded at cost and our proportionate share of gains and losses of the investee are
included as a component of other income (expense), net. Our equity method investments consist primarily of an investment
in Duck Creek Technologies. As of August 31, 2020, the carrying amount of our investment was $230,219 and the estimated
fair value of our approximately 22% ownership was $956,308.
For equity securities without a readily determinable fair value, we use the fair value measurement alternative and measure
the securities at cost less impairment, if any, plus or minus observable price changes in orderly transactions for an identical
or similar investment of the same issuer.
Table of Contents
ACCENTURE 2020 FORM 10-K
Notes To Consolidated Financial Statements — (continued)
(In thousands of U.S. dollars, except share and per share amounts or as otherwise disclosed)
F-16
Property and Equipment
Property and equipment is stated at cost, net of accumulated depreciation. Depreciation of property and equipment is
computed on a straight-line basis over the following estimated useful lives:
Computers, related equipment and software
Furniture and fixtures
Leasehold improvements
Goodwill
2 to 7 years
5 to 10 years
Lesser of lease term or 15 years
Goodwill represents the excess of the purchase price of an acquired entity over the fair value of net assets acquired. We
review the recoverability of goodwill by reportable operating segment annually, or more frequently when indicators of
impairment exist. Based on the results of our annual impairment analysis, we determined that no impairment existed as of
August 31, 2020 or 2019, as each reportable segment’s estimated fair value substantially exceeded its carrying value.
Long-Lived Assets
Long-lived assets, including deferred contract costs and identifiable intangible assets, are reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an asset or group of assets may not be recoverable.
Recoverability of long-lived assets or groups of assets is assessed based on a comparison of the carrying amount to the
estimated future net cash flows. If estimated future undiscounted net cash flows are less than the carrying amount, the asset
is considered impaired and a loss is recorded equal to the amount required to reduce the carrying amount to fair value.
Intangible assets with finite lives are generally amortized using the straight-line method over their estimated economic useful
lives, ranging from one to sixteen years.
Operating Expenses
Selected components of operating expenses are as follows:
Research and development costs
Advertising costs (1)
Provision for (release of) doubtful accounts (2)
(1)
(2)
Advertising costs are expensed as incurred.
For additional information, see “Allowances for Client Receivables.”
Fiscal
2020
2019
2018
$
870,611 $
799,734 $
790,779
57,658
147
85,521
974
78,464
(1,060)
Recently Adopted Accounting Pronouncements
Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) No.
2016-02 and related updates (“Topic 842”)
On September 1, 2019, we adopted FASB ASU No. 2016-02, Leases, and related updates (“Topic 842”) using the effective
date method. Prior period amounts were not adjusted. The primary impact of adoption is the requirement for lessees to
recognize assets and liabilities on the balance sheet for the rights and obligations created by both operating and finance
leases. Enhanced quantitative and qualitative disclosures about leasing arrangements are also required. We elected the
package of practical expedients which does not require reassessment of prior conclusions related to identifying leases, lease
classification or initial direct costs. We also elected the practical expedient to combine lease and non-lease components,
accounting for the combined components as a single lease component, for our office real estate and automobile leases. The
standard did not have a material impact on our Consolidated Income Statement.
Table of Contents
ACCENTURE 2020 FORM 10-K
Notes To Consolidated Financial Statements — (continued)
(In thousands of U.S. dollars, except share and per share amounts or as otherwise disclosed)
F-17
The impact of adopting Topic 842 on our Consolidated Balance Sheets is as follows:
Balance Sheet
CURRENT ASSETS
Other current assets
NON-CURRENT ASSETS
Lease assets
Other non-current assets
CURRENT LIABILITIES
Lease liabilities
Other accrued liabilities
NON-CURRENT LIABILITIES
Lease liabilities
Other non-current liabilities
Balance as of August 31,
2019
Adjustments due to ASU
2016-02 (Topic 842)
Balance as of September
1, 2019
$
1,225,364 $
(38,666) $
1,186,698
—
1,400,292
—
951,450
—
526,988
3,169,608
(10,333)
699,399
(703)
2,666,344
(244,431)
3,169,608
1,389,959
699,399
950,747
2,666,344
282,557
See Note 8 (Leases) to these Consolidated Financial Statements for further details.
FASB ASU No. 2018-15 (“Subtopic 350-40”)
On September 1, 2019, we prospectively adopted FASB ASU No. 2018-15, Intangibles - Goodwill and Other - Internal-Use
Software: Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service
Contract. ASU 2018-15 clarifies and aligns the accounting and capitalization of implementation costs in cloud computing
arrangements that are service arrangements with the accounting for implementation costs incurred to develop or obtain
internal-use software under ASC No. 350-40. Implementation costs that are currently capitalized in software licensing
arrangements (e.g. costs to configure the software) will be capitalized in cloud computing arrangements, and costs expensed
in software license arrangements (e.g. data conversion, training, and business process re-engineering) will be expensed in
cloud computing arrangements. The adoption did not have a material impact on our Consolidated Financial Statements.
Table of Contents
ACCENTURE 2020 FORM 10-K
Notes To Consolidated Financial Statements — (continued)
(In thousands of U.S. dollars, except share and per share amounts or as otherwise disclosed)
F-18
2. Revenues
Disaggregation of Revenue
See Note 16 (Segment Reporting) to these Consolidated Financial Statements for our disaggregated revenues.
Remaining Performance Obligations
We had remaining performance obligations of approximately $20 billion as of each of August 31, 2020 and 2019,
respectively. Our remaining performance obligations represent the amount of transaction price for which work has not been
performed and revenue has not been recognized. The majority of our contracts are terminable by the client on short notice
with little or no termination penalties, and some without notice. Only the non-cancelable portion of these contracts is included
in our performance obligations. Additionally, our performance obligations only include variable consideration if we assess it is
probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty is resolved. Based
on the terms of our contracts, a significant portion of what we consider contract bookings is not included in our remaining
performance obligations. We expect to recognize approximately 67% of our remaining performance obligations as of
August 31, 2020 as revenue in fiscal 2021, an additional 15% in fiscal 2022, and the balance thereafter.
Contract Estimates
Adjustments in contract estimates related to performance obligations satisfied or partially satisfied in prior periods were
immaterial for fiscal 2020 and 2019, respectively.
Contract Balances
Deferred transition revenues were $690,931 and $563,245 as of August 31, 2020 and 2019, respectively, and are included in
Non-current deferred revenues. Costs related to these activities are also deferred and are expensed as the services are
provided. Generally, deferred amounts are protected in the event of early termination of the contract and are monitored
regularly for impairment. Impairment losses are recorded when projected remaining undiscounted operating cash flows of the
related contract are not sufficient to recover the carrying amount of contract assets. Deferred transition costs
were $723,168 and $681,492 as of August 31, 2020 and 2019, respectively, and are included in Deferred contract costs.
Deferred transition amortization expense for fiscal 2020, 2019 and 2018 was $300,680, $274,814 and $333,118,
respectively.
The following table provides information about the balances of our Receivables, Contract assets and Contract liabilities
(Deferred revenues):
Receivables, net of allowance
Contract assets (current)
Receivables and contract assets (current)
Contract assets (non-current)
Deferred revenues (current)
Deferred revenues (non-current)
As of August 31, 2020
As of August 31, 2019
$
7,192,110 $
654,782
7,846,892
43,257
3,636,741
690,931
7,467,338
627,733
8,095,071
71,002
3,188,835
565,224
Changes in the contract asset and liability balances during fiscal 2020, were a result of normal business activity and not
materially impacted by any other factors.
Revenues recognized during fiscal 2020 that were included in Deferred revenues as of August 31, 2019 were $2.8 billion.
Revenues recognized during fiscal 2019 that were included in Deferred revenues as of September 1, 2018 were $2.9 billion.
Table of Contents
ACCENTURE 2020 FORM 10-K
Notes To Consolidated Financial Statements — (continued)
(In thousands of U.S. dollars, except share and per share amounts or as otherwise disclosed)
F-19
3. Earnings Per Share
Basic and diluted earnings per share are calculated as follows:
Basic Earnings per share
Net income attributable to Accenture plc
Basic weighted average Class A ordinary shares
Basic earnings per share
Diluted Earnings per share
Fiscal
2020
2019
2018
$ 5,107,839 $ 4,779,112 $ 4,059,907
636,299,913
638,098,125
628,451,742
$
8.03 $
7.49 $
6.46
Net income attributable to Accenture plc
Net income attributable to noncontrolling interests in Accenture Holdings plc
and Accenture Canada Holdings Inc. (1)
Net income for diluted earnings per share calculation
Basic weighted average Class A ordinary shares
Class A ordinary shares issuable upon redemption/exchange of
noncontrolling interests (1)
Diluted effect of employee compensation related to Class A ordinary shares
$ 5,107,839 $ 4,779,112 $ 4,059,907
6,325
6,694
95,063
$ 5,114,164 $ 4,785,806 $ 4,154,970
636,299,913
638,098,125
628,451,742
787,429
892,654
14,716,884
10,599,773
11,111,679
11,948,075
Diluted effect of share purchase plans related to Class A ordinary shares
109,888
102,415
179,449
Diluted weighted average Class A ordinary shares
Diluted earnings per share
647,797,003
650,204,873
655,296,150
$
7.89 $
7.36 $
6.34
(1)
Diluted earnings per share assumes the exchange of all Accenture Canada Holdings Inc. exchangeable shares for Accenture plc Class A
ordinary shares on a one-for-one basis and the redemption of all Accenture Holdings plc ordinary shares owned by holders of
noncontrolling interests prior to March 13, 2018, when these were redeemed for Accenture plc Class A ordinary shares. The income effect
does not take into account “Net income attributable to noncontrolling interests - other,” since those shares are not redeemable or
exchangeable for Accenture plc Class A ordinary shares.
Table of Contents
ACCENTURE 2020 FORM 10-K
Notes To Consolidated Financial Statements — (continued)
(In thousands of U.S. dollars, except share and per share amounts or as otherwise disclosed)
F-20
4. Accumulated Other Comprehensive Loss
The following table summarizes the changes in the accumulated balances for each component of accumulated other
comprehensive loss attributable to Accenture plc:
Foreign currency translation
Beginning balance
Foreign currency translation
Income tax benefit (expense)
Portion attributable to noncontrolling interests
Foreign currency translation, net of tax
Ending balance
Defined benefit plans
Beginning balance
Actuarial gains (losses)
Pension settlement
Prior service costs arising during the period
Reclassifications into net periodic pension and
post-retirement expense (1)
Income tax benefit (expense)
Portion attributable to noncontrolling interests
Defined benefit plans, net of tax
Ending balance
Cash flow hedges
Beginning balance
Unrealized gain (loss)
Reclassification adjustments into Cost of services
Income tax benefit (expense)
Portion attributable to noncontrolling interests
Cash flow hedges, net of tax
Ending balance (2)
Investments
Beginning balance
Unrealized gain (loss)
Income tax benefit (expense)
Portion attributable to noncontrolling interests
Investments, net of tax
Ending balance
Fiscal
2020
2019
2018
$
(1,207,975) $
207,566
(1,719)
(8,151)
197,696
(1,010,279)
(1,075,268) $
(138,680)
(607)
6,580
(132,707)
(1,207,975)
(770,043)
(310,548)
3,354
1,969
(305,225)
(1,075,268)
(672,323)
22,414
3,757
—
55,035
(24,041)
(65)
57,100
(615,223)
38,993
72,437
(48,545)
857
(28)
24,721
63,714
728
(778)
—
1
(777)
(49)
(419,284)
(379,090)
793
(2,105)
32,985
94,052
326
(253,039)
(672,323)
(84,010)
209,017
(48,333)
(37,522)
(159)
123,003
38,993
2,391
(1,970)
305
2
(1,663)
728
(440,619)
19,862
3,030
(28,696)
34,972
(7,799)
(34)
21,335
(419,284)
114,635
(169,958)
(93,105)
64,118
300
(198,645)
(84,010)
1,243
1,455
(305)
(2)
1,148
2,391
Accumulated other comprehensive loss
$
(1,561,837) $
(1,840,577) $
(1,576,171)
(1)
(2)
As of August 31, 2020, $54,285 of net losses is expected to be reclassified into net periodic pension and post-retirement expense
recognized in cost of services, sales and marketing, general and administrative costs and non-operating expenses in the next twelve
months.
As of August 31, 2020, $62,257 of net unrealized gains related to derivatives designated as cash flow hedges is expected to be reclassified
into cost of services in the next twelve months.
Table of Contents
ACCENTURE 2020 FORM 10-K
Notes To Consolidated Financial Statements — (continued)
(In thousands of U.S. dollars, except share and per share amounts or as otherwise disclosed)
F-21
5. Property and Equipment
The components of Property and equipment, net are as follows:
Buildings and land
Computers, related equipment and software
Furniture and fixtures
Leasehold improvements
Property and equipment, gross
Total accumulated depreciation
Property and equipment, net
August 31, 2020
August 31, 2019
$
61 $
1,978,380
456,136
1,424,722
3,859,299
56
1,723,623
394,671
1,228,845
3,347,195
(2,313,731)
(1,956,029)
$
1,545,568 $
1,391,166
Depreciation expense for fiscal 2020, 2019 and 2018 was $482,054, $440,796 and $423,471, respectively.
6. Business Combinations
We completed a number of individually immaterial acquisitions during fiscal years 2020, 2019 and 2018. These acquisitions
were completed primarily to expand our services and solutions offerings. The table below gives additional details related to
these acquisitions:
Total consideration
Goodwill
Intangible assets
Fiscal
2020
2019
$
1,513,910 $
1,170,044 $
1,352,839
377,060
920,696
282,144
2018
596,148
431,087
140,403
The intangible assets primarily consist of customer-related intangibles, which are being amortized over one to thirteen years.
The goodwill was allocated among our reportable operating segments and is partially deductible for U.S. federal income tax
purposes.
Table of Contents
ACCENTURE 2020 FORM 10-K
Notes To Consolidated Financial Statements — (continued)
(In thousands of U.S. dollars, except share and per share amounts or as otherwise disclosed)
F-22
7. Goodwill And Intangible Assets
Goodwill
The changes in the carrying amount of goodwill by reportable operating segment are as follows:
August 31,
2018
Additions/
Adjustments
Foreign
Currency
Translation
August 31,
2019
Additions/
Adjustments
Foreign
Currency
Translation
August 31,
2020
$ 3,440,285 $
534,269 $
(1,198) $ 3,973,356 $
628,458 $
2,627 $ 4,604,441
1,357,688
585,039
297,548
92,925
(86,013)
(14,993)
1,569,223
662,971
420,413
289,598
148,452
2,138,088
14,722
967,291
$ 5,383,012 $
924,742 $
(102,204) $ 6,205,550 $ 1,338,469 $
165,801 $ 7,709,820
GEOGRAPHIC MARKETS (1)
North America
Europe
Growth Markets
Total
(1)
Effective March 1, 2020, we began managing our business under a new growth model through our three geographic markets, which
became our reportable segments in the third quarter of fiscal 2020.
Goodwill includes immaterial adjustments related to prior period acquisitions.
Intangible Assets
Our definite-lived intangible assets by major asset class are as follows:
Intangible Asset Class
August 31, 2019
August 31, 2020
Gross
Carrying
Amount
Accumulated
Amortization
Net Carrying
Amount
Gross
Carrying
Amount
Accumulated
Amortization
Net Carrying
Amount
Customer-related
$ 1,013,976 $
(358,130) $
655,846 $ 1,319,332 $
(495,367) $
823,965
Technology
Patents
Other
Total
119,686
127,796
78,344
(45,851)
(66,167)
(28,875)
73,835
61,629
49,469
150,765
129,295
82,676
(55,543)
(66,954)
(34,986)
95,222
62,341
47,690
$ 1,339,802 $
(499,023) $
840,779 $ 1,682,068 $
(652,850) $ 1,029,218
Total amortization related to our intangible assets was $239,664, $177,150 and $170,187 for fiscal 2020, 2019 and 2018,
respectively. Estimated future amortization related to intangible assets held as of August 31, 2020 is as follows:
Fiscal Year
2021
2022
2023
2024
2025
Thereafter
Total
Estimated Amortization
$
214,120
172,641
154,297
127,673
108,068
252,419
$
1,029,218
Table of Contents
ACCENTURE 2020 FORM 10-K
8. Leases
Notes To Consolidated Financial Statements — (continued)
(In thousands of U.S. dollars, except share and per share amounts or as otherwise disclosed)
F-23
We account for leases in accordance with Topic 842. See Note 1 (Summary of Significant Accounting Policies) to these
Consolidated Financial Statements for further information on our adoption.
As a lessee, substantially all of our lease obligation is for office real estate. Our significant judgments used in determining our
lease obligation include whether a contract is or contains a lease and the determination of the discount rate used to calculate
the lease liability. We elected the practical expedient not to separate lease and associated non-lease components,
accounting for them as a single combined lease component, for our office real estate and automobile leases.
Our leases may include the option to extend or terminate before the end of the contractual term and are often non-
cancelable or cancelable only by the payment of penalties. Our lease assets and liabilities include these options in the lease
term when it is reasonably certain that they will be exercised. In certain cases, we sublease excess office real estate to third-
party tenants.
Lease assets and liabilities recognized at the lease commencement date are determined predominantly as the present value
of the payments due over the lease term. Since we cannot determine the implicit rate in our leases, we use our incremental
borrowing rate on that date to calculate the present value. Our incremental borrowing rate approximates the rate at which we
could borrow, on a secured basis for a similar term, an amount equal to our lease payments in a similar economic
environment.
Effective September 1, 2019, when we are the lessee, all leases are recognized as lease liabilities and associated lease
assets on the Consolidated Balance Sheet. Lease liabilities represent our obligation to make payments arising from the
lease. Lease assets represent our right to use an underlying asset for the lease term and may also include advance
payments, initial direct costs or lease incentives. Payments that depend upon an index or rate, such as the Consumer Price
Index (CPI), are included in the recognition of lease assets and liabilities at the commencement-date rate. Other variable
payments, such as common area maintenance, property and other taxes, utilities and insurance that are based on the
lessor’s cost, are recognized in the Consolidated Income Statement in the period incurred.
As of August 31, 2020, we had no material finance leases. Operating lease expense is recorded on a straight-line basis over
the lease term. Lease costs are as follows:
Operating lease cost
Variable lease cost
Sublease income
Supplemental information related to operating lease transactions is as follows:
Lease liability payments
Lease assets obtained in exchange for liabilities
Fiscal 2020
$
749,233
181,612
(27,192)
$
903,653
Fiscal 2020
$
$
725,892
592,026
As of August 31, 2020, our operating leases had a weighted average remaining lease term of 7.3 years and a weighted
average discount rate of 4.2%.
Table of Contents
ACCENTURE 2020 FORM 10-K
Notes To Consolidated Financial Statements — (continued)
(In thousands of U.S. dollars, except share and per share amounts or as otherwise disclosed)
F-24
The following maturity analysis presents future undiscounted cash outflows for operating leases as of August 31, 2020:
2021
2022
2023
2024
2025
Thereafter
Total lease payments (receipts)
Less interest
Total lease liabilities
Lease
Payments
$
770,640 $
652,652
549,069
456,020
371,856
1,148,600
3,948,837 $
(525,196)
$ 3,423,641
Sublease
Receipts
(19,415)
(10,296)
(9,888)
(9,256)
(7,341)
(26,289)
(82,485)
As of August 31, 2020, we have entered into leases that have not yet commenced with future lease payments of $541 million
that are not reflected in the table above. These leases are primarily related to office real estate and will commence in or
before fiscal 2022 with lease terms of up to 16 years.
Future minimum rental commitments under non-cancelable operating leases as of August 31, 2019, which were accounted
for in accordance with Topic 840, are as follows:
2020
2021
2022
2023
2024
Thereafter
Lease
Payments
$
688,020 $
597,307
516,544
428,481
363,107
1,246,097
$ 3,839,556 $
Sublease
Receipts
(24,884)
(17,908)
(8,535)
(7,541)
(7,184)
(30,708)
(96,760)
Table of Contents
ACCENTURE 2020 FORM 10-K
Notes To Consolidated Financial Statements — (continued)
(In thousands of U.S. dollars, except share and per share amounts or as otherwise disclosed)
F-25
9. Financial Instruments
Derivatives
In the normal course of business, we use derivative financial instruments to manage foreign currency exchange rate risk.
Derivative transactions are governed by a uniform set of policies and procedures covering areas such as authorization,
counterparty exposure and hedging practices. Positions are monitored using techniques such as market value and sensitivity
analyses. We do not enter into derivative transactions for trading purposes. We classify cash flows from our derivative
programs as cash flows from operating activities in the Consolidated Cash Flows Statements.
Certain derivatives give rise to credit risks from the possible non-performance by counterparties. Credit risk is generally
limited to the fair value of those contracts that are favorable to us, and the maximum amount of loss due to credit risk, based
on the gross fair value of our derivative financial instruments that are in an asset position, was $154,749 as of August 31,
2020.
We utilize standard counterparty master agreements containing provisions for the netting of certain foreign currency
transaction obligations and for set-off of certain obligations in the event of an insolvency of one of the parties to the
transaction. These provisions may reduce our potential overall loss resulting from the insolvency of a counterparty and
reduce a counterparty’s potential overall loss resulting from our insolvency. Additionally, these agreements contain early
termination provisions triggered by adverse changes in a counterparty’s credit rating, thereby enabling us to accelerate
settlement of a transaction prior to its contractual maturity and potentially decrease our realized loss on an open transaction.
Similarly, a decrement in our credit rating could trigger a counterparty’s early termination rights, thereby enabling a
counterparty to accelerate settlement of a transaction prior to its contractual maturity and potentially increase our realized
loss on an open transaction. The aggregate fair value of our derivative instruments with credit-risk-related contingent features
that were in a liability position as of August 31, 2020 was $39,018.
Our derivative financial instruments consist of deliverable and non-deliverable foreign currency forward contracts. Fair values
for derivative financial instruments are based on prices computed using third-party valuation models and are classified as
Level 2 in accordance with the three-level hierarchy of fair value measurements. All of the significant inputs to the third-party
valuation models are observable in active markets. Inputs include current market-based parameters such as forward rates
and yield curves. For additional information related to the three-level hierarchy of fair value measurements, see Note 12
(Retirement and Profit Sharing Plans) to these Consolidated Financial Statements.
Cash Flow Hedges
Certain of our subsidiaries are exposed to currency risk through their use of our global delivery resources. To mitigate this
risk, we use foreign currency forward contracts to hedge the foreign exchange risk of the forecasted intercompany expenses
denominated in foreign currencies for up to three years in the future. We have designated these derivatives as cash flow
hedges. As of August 31, 2020 and 2019, we held no derivatives that were designated as fair value or net investment
hedges.
In order for a derivative to qualify for hedge accounting, the derivative must be formally designated as a fair value, cash flow
or net investment hedge by documenting the relationship between the derivative and the hedged item. The documentation
includes a description of the hedging instrument, the hedged item, the risk being hedged, our risk management objective and
strategy for undertaking the hedge, the method for assessing the effectiveness of the hedge and the method for measuring
hedge ineffectiveness. Additionally, the hedge relationship must be expected to be highly effective at offsetting changes in
either the fair value or cash flows of the hedged item at both inception of the hedge and on an ongoing basis.
For a cash flow hedge, the effective portion of the change in estimated fair value of a hedging instrument is recorded in
Accumulated other comprehensive loss as a separate component of Shareholders’ Equity and is reclassified into Cost of
services in the Consolidated Income Statements during the period in which the hedged transaction is recognized. The
amounts related to derivatives designated as cash flow hedges that were reclassified into Cost of services were net gains of
$48,545, $48,333 and $93,105 during fiscal 2020, 2019 and 2018, respectively. The ineffective portion of the change in fair
value of a cash flow hedge is recognized immediately in Other income (expense), net in the Consolidated Income
Statements and for fiscal 2020, 2019 and 2018, was not material. In addition, we did not discontinue any cash flow hedges
during fiscal 2020, 2019 or 2018.
Table of Contents
ACCENTURE 2020 FORM 10-K
Notes To Consolidated Financial Statements — (continued)
(In thousands of U.S. dollars, except share and per share amounts or as otherwise disclosed)
F-26
Other Derivatives
We also use foreign currency forward contracts, which have not been designated as hedges, to hedge balance sheet
exposures, such as intercompany loans. These instruments are generally short-term in nature, with typical maturities of less
than one year, and are subject to fluctuations in foreign exchange rates. Realized gains or losses and changes in the
estimated fair value of these derivatives were a net gain of $111,623, for fiscal 2020 and net losses of $112,113 and
$114,076 for fiscal 2019 and 2018, respectively. Gains and losses on these contracts are recorded in Other income
(expense), net in the Consolidated Income Statements and are offset by gains and losses on the related hedged items.
Fair Value of Derivative Instruments
The notional and fair values of all derivative instruments are as follows:
Assets
Cash Flow Hedges
Other current assets
Other non-current assets
Other Derivatives
Other current assets
Total assets
Liabilities
Cash Flow Hedges
Other accrued liabilities
Other non-current liabilities
Other Derivatives
Other accrued liabilities
Total liabilities
Total fair value
Total notional value
August 31, 2020 August 31, 2019
$
75,871 $
50,914
53,033
49,525
27,964
154,749 $
8,059
110,617
13,614 $
13,576
11,828
39,018 $
115,731 $
18,826
8,770
32,195
59,791
50,826
9,600,691 $
8,709,917
$
$
$
$
$
We utilize standard counterparty master agreements containing provisions for the netting of certain foreign currency
transaction obligations and for the set-off of certain obligations in the event of an insolvency of one of the parties to the
transaction. In the Consolidated Balance Sheets, we record derivative assets and liabilities at gross fair value. The potential
effect of netting derivative assets against liabilities under the counterparty master agreements is as follows:
Net derivative assets
Net derivative liabilities
Total fair value
August 31, 2020 August 31, 2019
$
$
129,520 $
13,789
115,731 $
88,811
37,985
50,826
Table of Contents
ACCENTURE 2020 FORM 10-K
Notes To Consolidated Financial Statements — (continued)
(In thousands of U.S. dollars, except share and per share amounts or as otherwise disclosed)
F-27
10. Borrowings and Indebtedness
As of August 31, 2020, we had the following borrowing facilities, including the issuance of letters of credit, to support general
working capital purposes:
Facility
Amount
Borrowings
Under
Facilities
$
1,000,000 $
1,000,000
903,674
245,762
$
3,149,436 $
—
—
—
—
—
Syndicated loan facility (1)
364-day syndicated loan facility (2)
Separate, uncommitted, unsecured multicurrency revolving credit facilities (3)
Local guaranteed and non-guaranteed lines of credit (4)
Total
(1)
(2)
(3)
(4)
On December 10, 2019, we replaced our $1,000,000 syndicated loan facility maturing on December 22, 2020 with a $1,000,000 syndicated
loan facility maturing on December 10, 2024. This facility provides unsecured, revolving borrowing capacity for general working capital
purposes, including the issuance of letters of credit. Financing is provided under this facility at the prime rate or at the London Interbank
Offered Rate, plus a spread. We continue to be in compliance with relevant covenant terms. The facility is subject to annual commitment
fees. As of August 31, 2020 and 2019, we had no borrowings under the facility.
On June 17, 2020, we entered into a $1,000,000 364-day syndicated loan facility, which matures on June 16, 2021. As of August 31, 2020
we had no borrowings under the facility. In the event of a loan drawn against this facility, the lenders have the option to require us to repay
the loan by issuing public debt within 45 days of their request.
We maintain separate, uncommitted and unsecured multicurrency revolving credit facilities. These facilities provide local currency financing
for the majority of our operations. Interest rate terms on the revolving facilities are at market rates prevailing in the relevant local markets.
As of August 31, 2020 and 2019, we had no borrowings under these facilities.
We also maintain local guaranteed and non-guaranteed lines of credit for those locations that cannot access our global facilities. As of
August 31, 2020 and 2019, we had borrowings under these various facilities of $0 and $2,458, respectively.
Under the borrowing facilities described above, we had an aggregate of $487,795 and $390,295 of letters of credit
outstanding as of August 31, 2020 and 2019, respectively. In addition, we had total outstanding debt of $61,872 and $22,658
as of August 31, 2020 and 2019, respectively.
Table of Contents
ACCENTURE 2020 FORM 10-K
Notes To Consolidated Financial Statements — (continued)
(In thousands of U.S. dollars, except share and per share amounts or as otherwise disclosed)
F-28
11. Income Taxes
Current taxes
U.S. federal
U.S. state and local
Non-U.S.
Total current tax expense
Deferred taxes
U.S. federal
U.S. state and local
Non-U.S.
Total deferred tax (benefit) expense
Total
The components of Income before income taxes are as follows:
U.S. sources
Non-U.S. sources
Total
Fiscal
2020
2019
2018
$
99,280 $
159,578 $
26,425
1,292,362
1,418,067
86,113
1,256,225
1,501,916
21,532
8,525
140,894
170,951
(143,217)
(39,588)
86,445
(96,360)
70,050
3,574
1,425,875
1,499,499
219,034
57,044
(182,078)
94,000
$
1,589,018 $
1,405,556 $
1,593,499
Fiscal
2020
2019
2018
$
$
1,352,968 $
853,173 $
645,943
5,421,363
5,398,624
5,162,150
6,774,331 $
6,251,797 $
5,808,093
On December 22, 2017, the U.S. enacted the Tax Cuts and Jobs Act (the “Tax Act”), which significantly changed U.S. tax law.
The Tax Act lowered the U.S. statutory federal income tax rate from 35% to 21%, effective January 1, 2018, resulting in a
blended U.S. statutory federal income tax rate of 25.7% for our fiscal year ended August 31, 2018 and a U.S. statutory
federal income tax rate of 21.0% for our fiscal year ended August 31, 2019. During fiscal 2018, we recognized tax expense of
$177,651 due primarily to the remeasurement of our net deferred tax assets at the new, lower rates.
The reconciliation of the U.S. federal statutory income tax rate to our effective income tax rate is as follows:
U.S. federal statutory income tax rate
U.S. state and local taxes, net
Non-U.S. operations taxed at other rates
Final determinations (1)
Other net activity in unrecognized tax benefits
Excess tax benefits from share based payments
Changes in tax laws and rates
Other, net
Effective income tax rate
2020
21.0 %
1.7
0.7
(1.9)
2.4
(1.9)
(0.2)
1.7
Fiscal
2019
21.0 %
1.5
1.1
(3.4)
3.2
(1.2)
—
0.3
2018
25.7 %
1.1
(6.1)
(1.9)
5.8
(2.3)
4.4
0.7
23.5 %
22.5 %
27.4 %
(1)
Final determinations include final agreements with tax authorities and expirations of statutes of limitations.
As of August 31, 2020, we had not recognized a deferred tax liability on $798,654 of undistributed earnings for certain foreign
subsidiaries, because these earnings are intended to be indefinitely reinvested. If such earnings were distributed, some
countries may impose additional taxes. The unrecognized deferred tax liability (the amount payable if distributed) is
approximately $40,000.
Portions of our operations are subject to reduced tax rates or are free of tax under various tax holidays which expire between
fiscal 2022 and 2025. The income tax benefits attributable to the tax status of these subsidiaries were estimated to be
approximately $38,000, $95,000 and $103,000 in fiscal 2020, 2019 and 2018, respectively.
Table of Contents
ACCENTURE 2020 FORM 10-K
Notes To Consolidated Financial Statements — (continued)
(In thousands of U.S. dollars, except share and per share amounts or as otherwise disclosed)
F-29
The revaluation of deferred tax assets and liabilities due to enacted changes in tax laws and tax rates did not have a material
impact on our effective tax rate in fiscal 2020 or 2019.
The components of our deferred tax assets and liabilities included the following:
Deferred tax assets
Pensions
Revenue recognition
Compensation and benefits
Share-based compensation
Tax credit carryforwards
Net operating loss carryforwards
Deferred amortization deductions
Indirect effects of unrecognized tax benefits
Licenses and other intangibles
Leases
Other
Total deferred tax assets
Valuation allowance
Deferred tax assets, net of valuation allowance
Deferred tax liabilities
Investments in subsidiaries
Intangibles
Leases
Other
Total deferred tax liabilities
Net deferred tax assets
August 31, 2020 August 31, 2019 (1)
$
443,231 $
115,287
574,349
334,061
659,835
159,506
828,098
279,105
1,752,612
729,787
280,883
6,156,754
(757,799)
5,398,955
(169,752)
(298,181)
(669,005)
(288,574)
(1,425,512)
446,920
115,529
623,986
292,045
527,748
175,196
798,852
302,093
1,958,738
27,857
210,642
5,479,606
(606,765)
4,872,841
(182,186)
(234,098)
(17)
(240,308)
(656,609)
$
3,973,443 $
4,216,232
(1)
Prior period amounts have been reclassified to conform with the current period presentation.
We recorded valuation allowances of $757,799 and $606,765 as of August 31, 2020 and 2019, respectively, against deferred
tax assets principally associated with certain tax credit and tax net operating loss carryforwards, as we believe it is more
likely than not that these assets will not be realized. For all other deferred tax assets, we believe it is more likely than not that
the results of future operations will generate sufficient taxable income to realize these deferred tax assets. During fiscal 2020,
we recorded a net increase of $151,034 in the valuation allowance. The majority of this change related to valuation
allowances on certain tax credit carryforwards, as we believe it is more likely than not that these assets will not be realized.
During fiscal 2019, we recorded a net increase of $154,990 in the valuation allowance. The majority of this change related to
valuation allowances on certain tax credit carryforwards, as we believe it is more likely than not that these assets will not be
realized.
We had tax credit carryforwards as of August 31, 2020 of $659,835, of which $24,933 will expire between 2021 and 2030,
$470 will expire between 2031 and 2040, and $634,432 has an indefinite carryforward period. We had net operating loss
carryforwards as of August 31, 2020 of $721,168. Of this amount, $124,845 expires between 2021 and 2030, $18,617
expires between 2031 and 2040, and $577,706 has an indefinite carryforward period.
As of August 31, 2020, we had $1,238,945 of unrecognized tax benefits, of which $934,183, if recognized, would favorably
affect our effective tax rate. As of August 31, 2019, we had $1,233,014 of unrecognized tax benefits, of which $908,522, if
recognized, would favorably affect our effective tax rate. The remaining unrecognized tax benefits as of August 31, 2020 and
2019 of $304,762 and $324,492, respectively, represent items recorded as offsetting tax benefits associated with the
correlative effects of potential transfer pricing adjustments, state income taxes and timing adjustments.
Table of Contents
ACCENTURE 2020 FORM 10-K
Notes To Consolidated Financial Statements — (continued)
(In thousands of U.S. dollars, except share and per share amounts or as otherwise disclosed)
F-30
A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:
Balance, beginning of year
Additions for tax positions related to the current year
Additions for tax positions related to prior years
Reductions for tax positions related to prior years
Statute of limitations expirations
Settlements with tax authorities
Foreign currency translation
Balance, end of year
Fiscal
2020
2019
$
1,233,014 $
1,210,520
168,938
58,977
(177,812)
(51,477)
(11,602)
18,907
211,671
354,890
(262,055)
(146,732)
(103,384)
(31,896)
$
1,238,945 $
1,233,014
For the year ended August 31, 2019, most of the additions for tax positions related to prior years are for items that had no net
impact to the consolidated financial statements.
We recognize interest and penalties related to unrecognized tax benefits in our Income tax expense. During fiscal 2020,
2019 and 2018, we recognized expense of $21,140, $8,645 and $37,230 in interest and penalties, respectively. Accrued
interest and penalties related to unrecognized tax benefits of $129,597 ($118,533, net of tax benefits) and $114,566
($105,852, net of tax benefits) were reflected on our Consolidated Balance Sheets as of August 31, 2020 and 2019,
respectively.
We have participated in the U.S. Internal Revenue Service (“IRS”) Compliance Assurance Process (“CAP”) program since
fiscal 2016. CAP tax years are examined by the IRS on a contemporaneous basis so that most issues are resolved prior to
filing the tax return. We are currently under audit in numerous state and non-U.S. tax jurisdictions. However, with limited
exceptions, we are no longer subject to income tax audits by those taxing authorities for years before 2013. Although the
outcome of tax audits is always uncertain and could result in significant cash tax payments, we do not believe the outcome of
these audits will have a material adverse effect on our consolidated financial position or results of operations. We believe that
it is reasonably possible that our unrecognized tax benefits could decrease by approximately $283,000 or increase by
approximately $405,000 in the next 12 months as a result of settlements, lapses of statutes of limitations, tax audit activity
and other adjustments. The majority of these amounts relate to transfer pricing matters in both U.S. and non-U.S. tax
jurisdictions.
Table of Contents
ACCENTURE 2020 FORM 10-K
Notes To Consolidated Financial Statements — (continued)
(In thousands of U.S. dollars, except share and per share amounts or as otherwise disclosed)
F-31
12. Retirement and Profit Sharing Plans
Defined Benefit Pension and Postretirement Plans
In the United States and certain other countries, we maintain and administer defined benefit retirement plans and
postretirement medical plans for certain current, retired and resigned employees. In addition, our U.S. defined benefit
pension plans include a frozen plan for former pre-incorporation partners, which is unfunded. Benefits under the employee
retirement plans are primarily based on years of service and compensation during the years immediately preceding
retirement or termination of participation in the plan. The defined benefit pension disclosures include our U.S. and material
non-U.S. defined benefit pension plans.
Assumptions
The weighted-average assumptions used to determine the defined benefit pension obligations as of August 31 and the net
periodic pension expense are as follows:
August 31,
2020
Pension Plans
August 31,
2019
August 31,
2018
Postretirement Plans
August 31,
2019
August 31,
2018
August 31,
2020
Discount rate for determining
projected benefit obligation
Discount rate for determining
net periodic pension expense
Long term rate of return on
plan assets
Rate of increase in future
compensation for determining
projected benefit obligation
Rate of increase in future
compensation for determining
net periodic pension expense
U.S.
Plans
Non-
U.S.
Plans
U.S.
Plans
Non-
U.S.
Plans
U.S.
Plans
Non-
U.S.
Plans
U.S. and
Non-U.S.
Plans
U.S. and
Non-U.S.
Plans
U.S. and
Non-U.S.
Plans
2.50 % 2.27 % 3.00 % 2.24 % 4.00 % 3.29 %
2.51 %
3.00 %
3.98 %
3.00 % 2.24 % 4.00 % 3.29 % 3.75 % 2.83 %
3.00 %
3.98 %
3.73 %
4.25 % 2.81 % 4.25 % 3.02 % 4.25 % 3.56 %
3.45 %
3.18 %
3.64 %
2.21 % 4.04 % 2.23 % 4.02 % 2.23 % 3.67 %
2.23 % 4.02 % 2.23 % 3.67 % 2.25 % 3.63 %
N/A
N/A
N/A
N/A
N/A
N/A
We utilize a full yield curve approach to estimate the service and interest cost components by applying specific spot rates
along the yield curve used in the determination of the benefit obligation to the relevant projected cash flows. This approach
provides a correlation between projected benefit cash flows and the corresponding yield curve spot rates and provides a
precise measurement of service and interest costs. The discount rate assumptions are based on the expected duration of the
benefit payments for each of our defined benefit pension and postretirement plans as of the annual measurement date and
are subject to change each year.
The expected long-term rate of return on plan assets should, over time, approximate the actual long-term returns on defined
benefit pension and postretirement plan assets and is based on historical returns and the future expectations for returns for
each asset class, as well as the target asset allocation of the asset portfolio.
Assumed U.S. Health Care Cost Trend
Our U.S. postretirement plan assumed annual rate of increase in the per capita cost of health care benefits is 6.4% for the
plan year ending June 30, 2021. The rate is assumed to decrease on a straight-line basis to 4.5% for the plan year ending
June 30, 2038 and remain at that level thereafter. A one percentage point increase in the assumed health care cost trend
rates would increase the benefit obligation by $119,602, while a one percentage point decrease would reduce the benefit
obligation by $92,093.
Table of Contents
ACCENTURE 2020 FORM 10-K
Notes To Consolidated Financial Statements — (continued)
(In thousands of U.S. dollars, except share and per share amounts or as otherwise disclosed)
F-32
Pension and Postretirement Expense
Pension expense for fiscal 2020, 2019 and 2018 was $168,367, $137,030 and $125,320, respectively. Postretirement
expense for fiscal 2020, 2019 and 2018 was not material to our Consolidated Financial Statements. The service cost
component of pension and postretirement expense is included in operating expenses while the other components of net
benefit cost are included in Other income (expense), net.
Benefit Obligation, Plan Assets and Funded Status
The changes in the benefit obligations, plan assets and funded status of our pension and postretirement benefit plans for
fiscal 2020 and 2019 are as follows:
Pension Plans
August 31,
2020
August 31,
2019
U.S. Plans
Non-
U.S. Plans
U.S. Plans
Non-
U.S. Plans
Postretirement Plans
August 31,
2020
U.S. and
Non-U.S.
Plans
August 31,
2019
U.S. and
Non-U.S.
Plans
Reconciliation of benefit obligation
Benefit obligation, beginning of year
$ 383,557 $ 2,166,377 $ 331,916 $ 1,772,712 $ 576,596 $ 535,632
Service cost
Interest cost
Participant contributions
Acquisitions/divestitures/transfers
Amendments
Curtailment
Pension settlement
Actuarial (gain) loss
Benefits paid
Exchange rate impact
3,080
9,771
—
—
—
—
—
26,495
(14,637)
108,871
44,395
12,521
14
—
—
(188)
(12,278)
(94,136)
—
131,829
3,100
12,364
—
—
—
—
—
88,913
52,466
11,989
28,510
2,105
(6,477)
(9,343)
22,142
15,647
18,056
20,498
—
—
—
—
—
—
—
—
—
—
50,002
379,173
46,630
16,880
(13,825)
—
(85,624)
(68,047)
(12,115)
(13,637)
428
(833)
Benefit obligation, end of year
$ 408,266 $ 2,357,405 $ 383,557 $ 2,166,377 $ 649,328 $ 576,596
Reconciliation of fair value of plan
assets
Fair value of plan assets, beginning of
year
Actual return on plan assets
Acquisitions/divestitures/transfers
Employer contributions
Participant contributions
Pension settlement
Benefits paid
Exchange rate impact
Other
$ 257,280 $ 1,214,062 $ 210,576 $ 1,127,376 $
31,920 $
28,713
27,911
—
10,635
—
—
46,815
—
88,068
12,521
—
50,397
—
10,131
—
—
(14,637)
(94,136)
(13,824)
—
—
89,049
(672)
—
—
97,845
25,347
81,531
11,989
(8,801)
(85,624)
(35,601)
—
2,079
—
9,942
—
—
4,924
—
11,920
—
—
(12,115)
(13,637)
—
—
—
—
Fair value of plan assets, end of year
$ 281,189 $ 1,355,707 $ 257,280 $ 1,214,062 $
31,826 $
31,920
Funded status, end of year
$
(127,077) $ (1,001,698) $ (126,277) $ (952,315) $ (617,502) $ (544,676)
Amounts recognized in the Consolidated
Balance Sheets
Non-current assets
Current liabilities
Non-current liabilities
$
3,232 $
67,341 $
6,707 $
67,396 $
— $
—
(10,213)
(42,990)
(10,473)
(33,981)
(1,169)
(1,257)
(120,096) (1,026,049)
(122,511)
(985,730)
(616,333)
(543,419)
Funded status, end of year
$
(127,077) $ (1,001,698) $ (126,277) $ (952,315) $ (617,502) $ (544,676)
Table of Contents
ACCENTURE 2020 FORM 10-K
Notes To Consolidated Financial Statements — (continued)
(In thousands of U.S. dollars, except share and per share amounts or as otherwise disclosed)
F-33
Accumulated Other Comprehensive Loss
The pre-tax accumulated net loss and prior service (credit) cost recognized in Accumulated other comprehensive loss as of
August 31, 2020 and 2019 is as follows:
Pension Plans
August 31,
2020
August 31,
2019
U.S. Plans
Non-U.S.
Plans
U.S. Plans
Non-U.S.
Plans
Postretirement Plans
August 31,
2020
U.S. and
Non-U.S.
Plans
August 31,
2019
U.S. and
Non-U.S.
Plans
$ 108,796 $ 605,635 $ 106,328 $ 633,619 $ 160,067 $ 121,798
—
20,056
—
21,954
15,114
19,427
$ 108,796 $ 625,691 $ 106,328 $ 655,573 $ 175,181 $ 141,225
Net loss
Prior service (credit) cost
Accumulated other comprehensive
loss, pre-tax
Funded Status for Defined Benefit Plans
The accumulated benefit obligation for defined benefit pension plans as of August 31, 2020 and 2019 is as follows:
Accumulated benefit obligation
August 31,
2020
August 31,
2019
U.S. Plans
Non-U.S.
Plans
U.S. Plans
Non-U.S.
Plans
$ 401,822 $ 2,135,566 $ 376,886 $ 1,964,148
The following information is provided for defined benefit pension plans and postretirement plans with projected benefit
obligations in excess of plan assets and for defined benefit pension plans with accumulated benefit obligations in excess of
plan assets as of August 31, 2020 and 2019:
Pension Plans
August 31,
2020
August 31,
2019
U.S. Plans
Non-U.S.
Plans
U.S. Plans
Non-U.S.
Plans
Postretirement Plans
August 31,
2020
U.S. and
Non-U.S.
Plans
August 31,
2019
U.S. and
Non-U.S.
Plans
Projected benefit obligation in excess
of plan assets
Projected benefit obligation
Fair value of plan assets
$ 130,309 $ 1,644,895 $ 132,984 $ 1,514,448 $ 649,328 $ 576,596
—
575,857
—
494,065
31,826
31,920
August 31,
2020
August 31,
2019
U.S. Plans
Non-U.S.
Plans
U.S. Plans
Non-U.S.
Plans
$ 130,309 $ 1,438,234 $ 132,984 $ 1,300,082
—
575,857
—
465,935
Accumulated benefit obligation in excess of plan assets
Accumulated benefit obligation
Fair value of plan assets
Investment Strategies
U.S. Pension Plans
The overall investment objective of the defined benefit pension plans is to match the duration of the plans’ assets to the
plans’ liabilities while managing risk in order to meet current defined benefit pension obligations. The plans’ future prospects,
their current financial conditions, our current funding levels and other relevant factors suggest that the plans can tolerate
some interim fluctuations in market value and rates of return in order to achieve long-term objectives without undue risk to
the plans’ ability to meet their current benefit obligations. We recognize that asset allocation of the defined benefit pension
plans’ assets is an important factor in determining long-term performance. Actual asset allocations at any point in time may
vary from the target asset allocations and will be dictated by current and anticipated market conditions, required cash flows
Table of Contents
ACCENTURE 2020 FORM 10-K
Notes To Consolidated Financial Statements — (continued)
(In thousands of U.S. dollars, except share and per share amounts or as otherwise disclosed)
F-34
and investment decisions of the investment committee and the pension plans’ investment funds and managers. Ranges are
established to provide flexibility for the asset allocation to vary around the targets without the need for immediate
rebalancing.
Non-U.S. Pension Plans
Plan assets in non-U.S. defined benefit pension plans conform to the investment policies and procedures of each plan and to
relevant legislation. The pension committee or trustee of each plan regularly, but at least annually, reviews the investment
policy and the performance of the investment managers. In certain countries, the trustee is also required to consult with us.
Asset allocation decisions are made to provide risk adjusted returns that align with the overall investment strategy for each
plan. Generally, the investment return objective of each plan is to achieve a total annualized rate of return that exceeds
inflation over the long term by an amount based on the target asset allocation mix of that plan. In certain countries, plan
assets are invested in funds that are required to hold a majority of assets in bonds, with a smaller proportion in equities. Also,
certain plan assets are entirely invested in contracts held with the plan insurer, which determines the strategy. Defined
benefit pension plans in certain countries are unfunded.
Risk Management
Plan investments are exposed to risks including market, interest rate and operating risk. In order to mitigate significant
concentrations of these risks, the assets are invested in a diversified portfolio primarily consisting of fixed income instruments
and equities. To minimize asset volatility relative to the liabilities, plan assets allocated to debt securities appropriately match
the duration of individual plan liabilities. Equities are diversified between U.S. and non-U.S. index funds and are intended to
achieve long term capital appreciation. Plan asset allocation and investment managers’ guidelines are reviewed on a regular
basis.
Plan Assets
Our target allocation for fiscal 2020 and weighted-average plan assets allocations as of August 31, 2020 and 2019 by asset
category for defined benefit pension plans are as follows:
Asset Category
Equity securities
Debt securities
Cash and short-term investments
Insurance contracts
Other
Total
Fair Value Measurements
2021 Target
Allocation
U.S.
Plans
Non-U.S.
Plans
2020
2019
U.S.
Plans
Non-U.S.
Plans
U.S.
Plans
Non-U.S.
Plans
— %
100
—
—
—
26 %
— %
19 %
— %
19 %
51
2
16
5
96
4
—
—
59
2
16
4
95
5
—
—
59
2
17
3
100 %
100 %
100 %
100 %
100 %
100 %
Fair value is the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction
between market participants at the measurement date and in the principal or most advantageous market for that asset or
liability. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or
liability, not on assumptions specific to the entity.
The three-level hierarchy of fair value measurements is based on whether the inputs to those measurements are observable
or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs
reflect our market assumptions. The fair-value hierarchy requires the use of observable market data when available and
consists of the following levels:
•
•
•
Level 1—Quoted prices for identical instruments in active markets;
Level 2—Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in
markets that are not active; and model-derived valuations in which all significant inputs are observable in active markets;
and
Level 3—Valuations derived from valuation techniques in which one or more significant inputs are unobservable.
Table of Contents
ACCENTURE 2020 FORM 10-K
Notes To Consolidated Financial Statements — (continued)
(In thousands of U.S. dollars, except share and per share amounts or as otherwise disclosed)
F-35
The fair values of defined benefit pension and postretirement plan assets as of August 31, 2020 are as follows:
Non-U.S. Plans
Equity
Mutual fund equity securities
Fixed Income
Non-U.S. government debt securities
Non-U.S. corporate debt securities
Mutual fund debt securities
Cash and short-term investments
Insurance contracts
Other
Total
Level 1
Level 2
Level 3
Total
$
— $
259,776 $
— $
259,776
163,602
20,639
—
13,858
—
—
—
—
611,028
14,509
79,575
52,415
—
—
—
—
140,305
—
163,602
20,639
611,028
28,367
219,880
52,415
$
198,099 $
1,017,303 $
140,305 $
1,355,707
The level 3 assets are primarily invested in an insurance buy-in contract in a Non-U.S. plan. The fair value of the assets is
set to an actuarially calculated present value of the underlying liabilities.
The U.S. Plans have $313,015 in Level 2 assets, primarily made up of U.S. corporate debt securities of $185,981 and U.S.
government, state and local debt securities of $75,583.
The following table provides a reconciliation of the beginning and ending balances of Level 3 assets for fiscal 2020:
Level 3 Assets
Beginning balance
Changes in fair value
Ending Balance
$
$
Fiscal 2020
133,421
6,884
140,305
The fair values of defined benefit pension and postretirement plan assets as of August 31, 2019 are as follows:
Non-U.S. Plans
Equity
Mutual fund equity securities
Fixed Income
Non-U.S. government debt securities
Non-U.S. corporate debt securities
Mutual fund debt securities
Cash and short-term investments
Insurance contracts
Other
Total
Level 1
Level 2
Level 3
Total
$
— $
226,386 $
— $
226,386
125,332
19,562
—
9,799
—
—
—
—
569,712
9,426
76,219
44,205
—
—
—
—
133,421
—
125,332
19,562
569,712
19,225
209,640
44,205
$
154,693 $
925,948 $
133,421 $
1,214,062
The level 3 assets are primarily invested in an insurance buy-in contract in a Non-U.S. plan. The fair value of the assets is
set to an actuarially calculated present value of the underlying liabilities.
The U.S. Plans have $289,200 in Level 2 assets, primarily made up of U.S. corporate debt securities of $166,756 and U.S.
government, state and local debt securities of $71,745.
The following table provides a reconciliation of the beginning and ending balances of Level 3 assets for fiscal 2019:
Level 3 Assets
Beginning balance
Purchases, sales and settlements
Changes in fair value
Ending Balance
$
$
Fiscal 2019
114,960
17,428
1,033
133,421
Table of Contents
ACCENTURE 2020 FORM 10-K
Notes To Consolidated Financial Statements — (continued)
(In thousands of U.S. dollars, except share and per share amounts or as otherwise disclosed)
F-36
Expected Contributions
Generally, annual contributions are made at such times and in amounts as required by law and may, from time to time,
exceed minimum funding requirements. We estimate we will pay approximately $106,001 in fiscal 2021 related to
contributions to our U.S. and non-U.S. defined benefit pension plans and benefit payments related to the unfunded frozen
plan for former pre-incorporation partners. We have not determined whether we will make additional voluntary contributions
for our defined benefit pension plans. Our postretirement plan contributions in fiscal 2021 are not expected to be material to
our Consolidated Financial Statements.
Estimated Future Benefit Payments
Benefit payments for defined benefit pension plans and postretirement plans, which reflect expected future service, as
appropriate, are expected to be paid as follows:
2021
2022
2023
2024
2025
2026-2030
Pension Plans
U.S. Plans
$
14,678 $
Postretirement
Plans
U.S. and Non-
U.S. Plans
12,335
Non-U.S.
Plans
106,299 $
15,416
16,195
16,959
17,743
98,570
103,597
116,624
115,224
126,526
643,025
13,990
15,737
17,769
19,826
134,072
Defined Contribution Plans
In the United States and certain other countries, we maintain and administer defined contribution plans for certain current,
retired and resigned employees. Total expenses recorded for defined contribution plans were $557,888, $530,501 and
$485,736 in fiscal 2020, 2019 and 2018, respectively.
Table of Contents
ACCENTURE 2020 FORM 10-K
Notes To Consolidated Financial Statements — (continued)
(In thousands of U.S. dollars, except share and per share amounts or as otherwise disclosed)
F-37
13. Share-Based Compensation
Share Incentive Plans
The Amended and Restated Accenture plc 2010 Share Incentive Plan, as amended and approved by our shareholders in
2020 (the “Amended 2010 SIP”), is administered by the Compensation Committee of the Board of Directors of Accenture and
provides for the grant of nonqualified share options, incentive stock options, restricted share units and other share-based
awards. A maximum of 114,000,000 Accenture plc Class A ordinary shares are currently authorized for awards under the
Amended 2010 SIP. As of August 31, 2020, there were 25,216,854 shares available for future grants. Accenture plc Class A
ordinary shares covered by awards that terminate, lapse or are cancelled may again be used to satisfy awards under the
Amended 2010 SIP. We issue new Accenture plc Class A ordinary shares and shares from treasury for shares delivered
under the Amended 2010 SIP.
A summary of information with respect to share-based compensation is as follows:
Fiscal
2020
2019
2018
Total share-based compensation expense included in Net income
$
1,197,806 $
1,093,253 $
976,908
Income tax benefit related to share-based compensation included in
Net income
430,290
356,062
404,124
Restricted Share Units
Under the Amended 2010 SIP, participants may be, and previously under the predecessor 2001 Share Incentive Plan were,
granted restricted share units, each of which represent an unfunded, unsecured right to receive an Accenture plc Class A
ordinary share on the date specified in the participant’s award agreement. The fair value of the awards is based on our stock
price on the date of grant. The restricted share units granted under these plans are subject to cliff or graded vesting,
generally ranging from two to five years. For awards with graded vesting, compensation expense is recognized over the
vesting term of each separately vesting portion. Compensation expense is recognized on a straight-line basis for awards with
cliff vesting. Restricted share unit activity during fiscal 2020 is as follows:
Nonvested balance as of August 31, 2019
Granted (1)
Vested (2)
Forfeited
Nonvested balance as of August 31, 2020
Number of Restricted
Share Units
Weighted Average
Grant-Date Fair Value
19,002,115 $
7,543,339
(7,698,685)
(1,106,838)
17,739,931 $
136.66
206.05
138.55
148.29
164.62
(1)
(2)
The weighted average grant-date fair value for restricted share units granted for fiscal 2020, 2019 and 2018 was $206.05, $144.52 and
$153.33, respectively.
The total grant-date fair value of restricted share units vested for fiscal 2020, 2019 and 2018 was $1,066,622, $914,206 and $842,002,
respectively.
As of August 31, 2020, there was $1,083,367 of total unrecognized restricted share unit compensation expense related to
nonvested awards, which is expected to be recognized over a weighted average period of 1.2 years. As of August 31, 2020,
there were 553,907 restricted share units vested but not yet delivered as Accenture plc Class A ordinary shares.
Table of Contents
ACCENTURE 2020 FORM 10-K
Notes To Consolidated Financial Statements — (continued)
(In thousands of U.S. dollars, except share and per share amounts or as otherwise disclosed)
F-38
Employee Share Purchase Plan
2010 ESPP
The Amended and Restated Accenture plc 2010 Employee Share Purchase Plan (the “2010 ESPP”) is a nonqualified plan
that provides eligible employees of Accenture plc and its designated affiliates with an opportunity to purchase Accenture plc
Class A ordinary shares through payroll deductions. Under the 2010 ESPP, eligible employees may purchase Accenture plc
Class A ordinary shares through the Employee Share Purchase Plan (the “ESPP”) or the Voluntary Equity Investment
Program (the “VEIP”). Under the ESPP, eligible employees may elect to contribute 1% to 10% of their eligible compensation
during each semi-annual offering period (up to $7.5 per offering period) to purchase Accenture plc Class A ordinary shares at
a discount. Under the VEIP, eligible members of Accenture Leadership may elect to contribute up to 30% of their eligible
compensation towards the monthly purchase of Accenture plc Class A ordinary shares at fair market value. At the end of the
VEIP program year, Accenture Leadership participants who did not withdraw from the program will be granted restricted
share units under the Amended 2010 SIP equal to 50% of the number of shares purchased during that year and held by the
participant as of the grant date.
A maximum of 90,000,000 Accenture plc Class A ordinary shares may be issued under the 2010 ESPP. As of August 31,
2020, we had issued 64,956,222 Accenture plc Class A ordinary shares under the 2010 ESPP. We issued 5,410,497,
5,433,817 and 5,428,356 shares to employees in fiscal 2020, 2019 and 2018, respectively, under the 2010 ESPP.
Table of Contents
ACCENTURE 2020 FORM 10-K
Notes To Consolidated Financial Statements — (continued)
(In thousands of U.S. dollars, except share and per share amounts or as otherwise disclosed)
F-39
14. Shareholders’ Equity
Accenture plc
Ordinary Shares
We have 40,000 authorized ordinary shares, par value €1 per share. Each ordinary share of Accenture plc entitles its holder
to receive payments upon a liquidation of Accenture plc; however a holder of an ordinary share is not entitled to vote on
matters submitted to a vote of shareholders of Accenture plc or to receive dividends.
Class A Ordinary Shares
An Accenture plc Class A ordinary share entitles its holder to one vote per share, and holders of those shares do not have
cumulative voting rights. Each Class A ordinary share entitles its holder to a pro rata part of any dividend at the times and in
the amounts, if any, which Accenture plc’s Board of Directors from time to time determines to declare, subject to any
preferred dividend rights attaching to any preferred shares. Each Class A ordinary share is entitled on a winding-up of
Accenture plc to be paid a pro rata part of the value of the assets of Accenture plc remaining after payment of its liabilities,
subject to any preferred rights on liquidation attaching to any preferred shares.
Class X Ordinary Shares
Most of our pre-incorporation partners who received Accenture Canada Holdings Inc. exchangeable shares in connection
with our transition to a corporate structure received a corresponding number of Accenture plc Class X ordinary shares. An
Accenture plc Class X ordinary share entitles its holder to one vote per share, and holders of those shares do not have
cumulative voting rights. A Class X ordinary share does not entitle its holder to receive dividends, and holders of those
shares are not entitled to be paid any amount upon a winding-up of Accenture plc. Accenture plc may redeem, at its option,
any Class X ordinary share for a redemption price equal to the par value of the Class X ordinary share. Accenture plc has
separately agreed with the original holders of Accenture Canada Holdings Inc. exchangeable shares not to redeem any
Class X ordinary share of such holder if the redemption would reduce the number of Class X ordinary shares held by that
holder to a number that is less than the number of Accenture Canada Holdings Inc. exchangeable shares owned by that
holder, as the case may be. Accenture plc will redeem Class X ordinary shares upon the redemption or exchange of
Accenture Canada Holdings Inc. exchangeable shares so that the aggregate number of Class X ordinary shares outstanding
at any time does not exceed the aggregate number of Accenture Canada Holdings Inc. exchangeable shares outstanding.
Class X ordinary shares are not transferable without the consent of Accenture plc.
Equity of Subsidiaries Redeemable or Exchangeable for
Accenture plc Class A Ordinary Shares
Accenture Canada Holdings Inc. Exchangeable Shares
Pre-incorporation partners resident in Canada and New Zealand received Accenture Canada Holdings Inc. exchangeable
shares in connection with our transition to a corporate structure. Holders of Accenture Canada Holdings Inc. exchangeable
shares may exchange their shares for Accenture plc Class A ordinary shares at any time on a one-for-one basis. We may, at
our option, satisfy this exchange with cash at a price per share generally equal to the market price of an Accenture plc Class
A ordinary share at the time of the exchange. Each exchangeable share of Accenture Canada Holdings Inc. entitles its holder
to receive distributions equal to any distributions to which an Accenture plc Class A ordinary share entitles its holder.
Share Purchases and Redemptions
The Board of Directors of Accenture plc has authorized funding for our publicly announced open-market share purchase
program for acquiring Accenture plc Class A ordinary shares and for purchases and redemptions of Accenture plc Class A
ordinary shares and Accenture Canada Holdings Inc. exchangeable shares held by current and former members of
Accenture Leadership and their permitted transferees. As of August 31, 2020, our aggregate available authorization was
$1,314,762 for our publicly announced open-market share purchase and these other share purchase programs.
Table of Contents
ACCENTURE 2020 FORM 10-K
Notes To Consolidated Financial Statements — (continued)
(In thousands of U.S. dollars, except share and per share amounts or as otherwise disclosed)
F-40
Our share purchase activity during fiscal 2020 is as follows:
Accenture plc Class A
Ordinary Shares
Accenture Canada
Holdings Inc. Exchangeable Shares
Shares
Amount
Shares
11,983,661 $
2,337,732
— $
—
2,746,369
—
556,521
100,795
—
14,730,030 $
2,894,253
100,795 $
Amount
—
21,594
—
21,594
Open-market share purchases (1)
Other share purchase programs
Other purchases (2)
Total
(1)
(2)
We conduct a publicly announced open-market share purchase program for Accenture plc Class A ordinary shares. These shares are held
as treasury shares by Accenture plc and may be utilized to provide for select employee benefits, such as equity awards to our employees.
During fiscal 2020, as authorized under our various employee equity share plans, we acquired Accenture plc Class A ordinary shares
primarily via share withholding for payroll tax obligations due from employees and former employees in connection with the delivery of
Accenture plc Class A ordinary shares under those plans. These purchases of shares in connection with employee share plans do not
affect our aggregate available authorization for our publicly announced open-market share purchase and the other share purchase
programs.
Cancellation of Treasury Shares
During fiscal 2020, we cancelled 5,526,491 Accenture plc Class A ordinary shares that were held as treasury shares and had
an aggregate cost of $1,056,145. The effect of the cancellation of these treasury shares was recognized in Class A ordinary
shares and Additional paid-in capital with the residual recorded in Retained earnings. There was no effect on total
shareholders’ equity as a result of this cancellation.
Dividends
Our dividend activity during fiscal 2020 is as follows:
Dividend Payment Date
November 15, 2019
February 14, 2020
May 15, 2020
August 14, 2020
Total Dividends
Dividend
Per
Share
Accenture plc Class A
Ordinary Shares
Accenture Canada
Holdings Inc. Exchangeable Shares
Record Date
Cash Outlay
Record Date
Cash Outlay
Total Cash
Outlay
$
0.80 October 17, 2019 $
507,725
October 15, 2019 $
656 $
508,381
0.80
0.80
0.80
January 16, 2020
April 16, 2020
July 16, 2020
510,604
508,283
508,586
January 14, 2020
April 14, 2020
July 14, 2020
634
630
615
511,238
508,913
509,201
$ 2,035,198
$
2,535 $ 2,037,733
The payment of the cash dividends also resulted in the issuance of an immaterial number of additional restricted share units
to holders of restricted share units.
Subsequent Events
On September 23, 2020, the Board of Directors of Accenture plc declared a quarterly cash dividend of $0.88 per share on
our Class A ordinary shares for shareholders of record at the close of business on October 13, 2020 payable on
November 13, 2020. The payment of the cash dividend will result in the issuance of an immaterial number of additional
restricted share units to holders of restricted share units.
On September 20, 2020, the Board of Directors of Accenture plc approved $5,000,000 in additional share repurchase
authority bringing Accenture’s total outstanding authority to $6,314,762.
Table of Contents
ACCENTURE 2020 FORM 10-K
Notes To Consolidated Financial Statements — (continued)
(In thousands of U.S. dollars, except share and per share amounts or as otherwise disclosed)
F-41
15. Commitments and Contingencies
Indemnifications and Guarantees
In the normal course of business and in conjunction with certain client engagements, we have entered into contractual
arrangements through which we may be obligated to indemnify clients with respect to certain matters. These arrangements
with clients can include provisions whereby we have joint and several liability in relation to the performance of certain
contractual obligations along with third parties also providing services and products for a specific project. In addition, our
consulting arrangements may include warranty provisions that our solutions will substantially operate in accordance with the
applicable system requirements. Indemnification provisions are also included in arrangements under which we agree to hold
the indemnified party harmless with respect to third-party claims related to such matters as title to assets sold or licensed or
certain intellectual property rights.
Typically, we have contractual recourse against third parties for certain payments we made in connection with arrangements
where third-party nonperformance has given rise to the client’s claim. Payments we made under any of the arrangements
described above are generally conditioned on the client making a claim, which may be disputed by us typically under dispute
resolution procedures specified in the particular arrangement. The limitations of liability under these arrangements may be
expressly limited or may not be expressly specified in terms of time and/or amount.
As of August 31, 2020 and 2019, our aggregate potential liability to our clients for expressly limited guarantees involving the
performance of third parties was approximately $832,000 and $794,000, respectively, of which all but approximately $87,000
and $128,000, respectively, may be recovered from the other third parties if we are obligated to make payments to the
indemnified parties as a consequence of a performance default by the other third parties. For arrangements with unspecified
limitations, we cannot reasonably estimate the aggregate maximum potential liability, as it is inherently difficult to predict the
maximum potential amount of such payments, due to the conditional nature and unique facts of each particular arrangement.
To date, we have not been required to make any significant payment under any of the arrangements described above. We
have assessed the current status of performance/payment risk related to arrangements with limited guarantees, warranty
obligations, unspecified limitations and/or indemnification provisions and believe that any potential payments would be
immaterial to the Consolidated Financial Statements.
Legal Contingencies
As of August 31, 2020, we or our present personnel had been named as a defendant in various litigation matters. We and/or
our personnel also from time to time are involved in investigations by various regulatory or legal authorities concerning
matters arising in the course of our business around the world. Based on the present status of these matters, including the
putative class action lawsuit discussed below, management believes the range of reasonably possible losses in addition to
amounts accrued, net of insurance recoveries, will not have a material effect on our results of operations or financial
condition.
On July 24, 2019, Accenture was named in a putative class action lawsuit filed by consumers of Marriott International, Inc.
(“Marriott”) in the U.S. District Court for the District of Maryland. The complaint alleges negligence by us, and seeks monetary
damages, costs and attorneys’ fees and other related relief, relating to a data security incident involving unauthorized access
to the reservations database of Starwood Worldwide Resorts, Inc. (“Starwood”), which was acquired by Marriott on
September 23, 2016. Since 2009, we have provided certain IT infrastructure outsourcing services to Starwood. We believe
the lawsuit is without merit and we will vigorously defend it. We cannot reasonably estimate a range of loss, if any, at this
time.
Table of Contents
ACCENTURE 2020 FORM 10-K
Notes To Consolidated Financial Statements — (continued)
(In thousands of U.S. dollars, except share and per share amounts or as otherwise disclosed)
F-42
16. Segment Reporting
Operating segments are components of an enterprise where separate financial information is available and is evaluated
regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in
assessing performance.
Our chief operating decision makers are our Chief Executive Officer and Chief Financial Officer. Our operating segments are
managed separately because each operating segment represents a strategic business unit providing consulting and
outsourcing services to clients across different industries.
Effective March 1, 2020, we began managing our business under a new growth model through our three geographic
markets, North America, Europe and Growth Markets, which became our reportable segments in the third quarter of fiscal
2020. The change is designed to help us better serve our clients and continue to scale our business. Prior to this change, our
reportable segments were our five operating groups, Communications, Media & Technology, Financial Services, Health &
Public Service, Products and Resources, which we now refer to as our industry groups.
Amounts are attributed to geographic markets based on where clients are located. Information regarding our geographic
markets is as follows:
Fiscal 2020
Revenues
Depreciation and amortization (1)
Operating income
Net assets as of August 31 (2)
Property & equipment, net
Fiscal 2019
Revenues (3)
Depreciation and amortization (1)
Operating income
Net assets as of August 31 (2)
Property & equipment, net
Fiscal 2018
Revenues (3) (4)
Depreciation and amortization (1)
Operating income (4)
Net assets as of August 31 (2)
Property & equipment, net
North America
Europe
Growth Markets
Total
$
20,982,253 $
14,402,142 $
8,942,644 $
44,327,039
348,761
3,169,648
2,585,659
499,976
341,245
1,799,431
1,079,904
389,968
332,393
1,544,565
620,083
655,624
1,022,399
6,513,644
4,285,646
1,545,568
$
19,986,136 $
14,695,749 $
8,533,128 $
43,215,013
303,762
3,107,437
2,923,320
395,782
294,902
2,013,245
1,355,827
354,491
294,096
1,184,392
814,358
640,893
892,760
6,305,074
5,093,505
1,391,166
$
18,460,395 $
14,650,637 $
7,881,502 $
40,992,534
318,538
2,708,674
2,469,098
375,237
309,752
2,167,463
1,402,971
319,737
298,486
1,022,642
896,653
569,046
926,776
5,898,779
4,768,722
1,264,020
(1)
(2)
(3)
(4)
Amounts include depreciation on property and equipment and amortization of intangible assets controlled by each reportable segment, as
well as an allocation for amounts they do not directly control.
We do not allocate total assets by reportable segment. Reportable segment assets directly attributable to a reportable segment and
provided to the chief operating decision makers include receivables and current and non-current contract assets, deferred contract costs
and current and non-current deferred revenues.
Effective September 1, 2019 we revised the reporting of our geographic markets for the movement of one country from Growth Markets to
Europe. Prior period amounts have been reclassified to conform with the current period presentation.
Effective September 1, 2018, we adopted FASB ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) and FASB ASU
No. 2017-07, Compensation-Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic
Postretirement Benefit Cost. Prior period amounts have been revised to conform with the current period presentation.
The accounting policies of the reportable segments are the same as those described in Note 1 (Summary of Significant
Accounting Policies) to these Consolidated Financial Statements.
Our business in the United States represented 45%, 44% and 43% of our consolidated revenues during fiscal 2020, 2019
and 2018, respectively. No other country individually comprised 10% or more of our consolidated revenues during these
periods. Business in Ireland, our country of domicile, represented approximately 1% of our consolidated revenues during
each of fiscal 2020, 2019 and 2018.
Table of Contents
ACCENTURE 2020 FORM 10-K
Notes To Consolidated Financial Statements — (continued)
(In thousands of U.S. dollars, except share and per share amounts or as otherwise disclosed)
F-43
We conduct business in Ireland and in the following countries that hold 10% or more of our total consolidated Property and
equipment, net:
August 31, 2020
August 31, 2019
August 31, 2018
United States
India
Ireland
Revenues by industry group and type of work are as follows:
INDUSTRY GROUPS
Communications, Media & Technology
Financial Services
Health & Public Service
Products
Resources
Other
Total
TYPE OF WORK
Consulting
Outsourcing
Total
(1)
27 %
19
7
27 %
18
7
26 %
18
7
Fiscal
2020
2019
2018 (1)
$
8,883,173 $
8,757,250 $
8,229,842
8,518,136
8,022,704
12,272,036
6,611,544
19,446
8,493,819
7,160,787
12,004,934
6,771,976
26,247
8,565,695
6,877,779
11,337,863
5,942,012
39,343
$
44,327,039 $
43,215,013 $
40,992,534
$
24,227,024 $
24,177,428 $
22,978,798
20,100,015
19,037,585
18,013,736
$
44,327,039 $
43,215,013 $
40,992,534
Effective September 1, 2018, we adopted FASB ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). Prior period
amounts have been revised to conform with the current period presentation. In addition, we updated industry group results for fiscal 2018
to include an acquisition previously categorized within other.
Table of Contents
ACCENTURE 2020 FORM 10-K
Notes To Consolidated Financial Statements — (continued)
(In thousands of U.S. dollars, except share and per share amounts or as otherwise disclosed)
F-44
17. Quarterly Data (unaudited)
Fiscal 2020
Revenues
Cost of services
Operating income
Net income
Net income attributable to Accenture plc
Weighted average Class A ordinary
shares:
—Basic
—Diluted
Earnings per Class A ordinary share:
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
Annual
$
11,358,958 $
11,141,505 $
10,991,305 $
10,835,271 $
44,327,039
7,711,199
1,767,263
1,375,168
1,356,968
7,782,334
1,488,945
1,252,082
1,234,740
7,462,617
1,712,733
1,252,639
1,228,202
7,394,731
1,544,703
1,305,424
1,287,929
30,350,881
6,513,644
5,185,313
5,107,839
635,722,309
637,485,626
636,146,240
635,887,742
636,299,913
649,389,444
648,833,880
645,607,914
647,867,307
647,797,003
—Basic
—Diluted
Fiscal 2019
Revenues
Cost of services
Operating income
Net income
Net income attributable to Accenture plc
Weighted average Class A ordinary
shares:
—Basic
—Diluted
Earnings per Class A ordinary share:
$
$
2.13 $
2.09 $
1.94 $
1.91 $
1.93 $
1.90 $
2.03 $
1.99 $
8.03
7.89
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
Annual
$
10,605,546 $
10,454,129 $
11,099,688 $
11,055,650 $
43,215,013
7,308,121
1,629,012
1,291,324
1,274,720
7,399,780
1,386,626
1,140,720
1,124,449
7,571,390
1,717,943
1,268,649
1,249,516
7,621,034
1,571,493
1,145,548
1,130,427
29,900,325
6,305,074
4,846,241
4,779,112
638,877,445
638,639,729
637,831,341
637,049,388
638,098,125
652,151,450
649,170,699
649,297,717
650,523,417
650,204,873
—Basic
—Diluted
$
$
2.00 $
1.96 $
1.76 $
1.73 $
1.96 $
1.93 $
1.77 $
1.74 $
7.49
7.36