The Top 50 2008: Firms branded hypocrites over missing profit figures

Accountancy firms have been accused of operating double standards when it comes to revealing their own profitability.

Only 12 of the Top 50 firms questioned by Accountancy Age in its annual survey were prepared to reveal their profit figures.

‘It is hypocritical for accountants to make their living disclosing other people’s numbers, and then to refuse to do the same with their own,’ said Steve Pipe, chairman of accounting association AVN.

Pipe believes that firms are too scared to disclose their profits in case their clients discover how much the average partner is earning.

He added that another reason for refusing to divulge their profit figures could be they didn’t want the outside world to know they were not doing as well as expected.

‘They subsidise their profits by paying themselves too little,’

Pipe said. ‘As they don’t put salary costs in their accounts, their profits are notional.’

Pipe suspects that those firms that do disclose their operating profits do so only because the way they are set up legally leaves them with no other alternative.

‘I suspect the ones that do disclose only do so because they have to,’ said Pipe. ‘Deep down they would prefer not to.’

Most firms, he said, ‘are quite happy to hide behind the current cloak of convention’.

He added that the Big Four had to disclose their profits because of their legal structure and because they saw themselves in ‘competition with each other’.

PwC recorded profits of £631m for 2007, an 11% increase on 2006. Deloitte recorded £564m, a rise of 22%,and KPMG declared £447m,a 20% increase. Ernst & Young posted profits of £328m.

The percentages of firms’ female and ethnic minority partners show little change from 2007, at 12% and 4% respectively.

‘Progression through the ranks will take time,’ said Pipe. ‘Given the increasingly difficult times there will be less movement of partners than there has been in the past.’

Further reading

For full coverage of our Top 50 2008 survey, visit our special report