E&Y: Steve Varley and audit rebels

by Kevin Reed

More from this author

02 Oct 2012

  • Comments
big-four-concentrated-audit-1

ERNST & YOUNG managing partner Steve Varley has been much more vocal than normal – perhaps it's because the firm has posted its best top line numbers in many years.

Of course we don't know how much profit the firm has made, although E&Y has admitted that the ‘average' profit-per-partner figure is down a bit on the previous year.

But outside of the headline numbers presented in the firm's press release, there are a few more details lurking in its newly revealed transparency report that are of interest to the profession – auditors in particular.

E&Y's assurance arm grew 8% to £478m for the year ending 29 June 2012. The firm grew its overall revenues by 11% to more than £1.6bn.

But statutory audit fees earned were pretty static at £318m, from £311m in 2011 – an increase of a couple of percent.

Fees for assurance services from non-audit clients rose to £139m from £112m, a 24% hike.

As Varley said: "We continue to win in the UK audit market and have had some very significant new clients choose us this year ... We have had some losses too, but this just demonstrates that we live in a highly competitive market."

So what does this mean?

For E&Y, it suggests that they've had to work hard to maintain audit revenues.

In one way at least, E&Y's success in the non-audit space is worrying for the BDOs and GTs of this world. Picking up non-audit appointments among major listed companies is a big deal for firms five and six, as the work itself is lucrative and also helps give them a footing for picking up audit clients of the future.

But in a world where the audit market's operation is under such scrutiny, some would argue that E&Y's efforts to maintain revenues show the market is working effectively. BDO and GT might argue differently.

Visitor comments

blog comments powered by Disqus
display:none

Add your comment

We won't publish your address


By submitting a comment you agree to abide by our Terms & Conditions

Your comment will be moderated before publication

Submit
  • Send

Newsletters

Get the latest financial news sent directly to your inbox

  • Best Practice
  • Business
  • Daily Newsletter
  • Essentials

Careers

Search for jobs
Click to search our database of all the latest accountancy roles

Create a profile
Click to set up your profile and let the best recruiters find you

Jobs by email
Sign up to receive regular updates with the latest roles suitable for you

Briefings

budget-management

Why budgeting fails: One management system is not enough

If budgeting is to have any value at all, it needs a radical overhaul. In today's dynamic marketplace, budgeting can no longer serve as a company's only management system; it must integrate with and support dedicated strategy management systems, process improvement systems, and the like. In this paper, Professor Peter Horvath and Dr Ralf Sauter present what's wrong with the current approach to budgeting and how to fix it.

cchcover

iXBRL: Taking stock. Looking forward

In this white paper CCH provide checklists to help accountants and finance professionals both in practice and in business examine these issues and make plans. Also includes a case study of a large commercial organisation working through the first year of mandatory iXBRL filing.