Things may be looking up for the accountancy profession, if combined fee income is anything to go by. The killer combination of international financial reporting standards, Sarbox-style compliance work and an explosion in revenues from consultancy service lines all helped propel the sector well and truly out of the doldrums.

At £6.72bn, total fee income across the Top 50 has witnessed a 6% jump on 2004 ­ the Big Four firms alone have seen combined revenues increase by £200m on last year to £4.8bn. But it’s the mid-tier that has reaped the most benefits from the upturn, with fees up almost 10% on 2004.

This should mean spirits are high, yet there is a distinct malaise across the profession. True, the pipeline of work may be bountiful, but staff attrition rates are at an all-time high. It means firms often struggle to replace those defecting to other firms or succumbing to the lure of business, let alone find additional headcount to man their growth-hungry departments.

Even in last year’s Accountancy Age Top 50, skills shortages across the profession looked likely to overshadow a revival in the firms’ fortunes. Back then, 80% of the UK’s biggest firms said they were looking to increase professional headcount, and more than half said they had plans to take on more partners over the coming 12 months.

In reality, widespread increases in professional headcount have failed to materialise: 40% of firms in this year’s Top 50 have actually reduced their numbers of professional staff in the last 12 months. At partner level, 63% of last year’s Top 50 had either fewer or the same number of staff. Last year’s prediction ­ that a dearth of qualified staff could stifle growth ­ rings all too true.

Whether the reduction in professional headcount is a result of a conscious decision to reduce staff numbers, or a consequence of an extremely tight recruitment market is impossible to divine from the survey results alone. But all the evidence suggests that boosting professional staff numbers is a priority. Going forward, 82% of respondents said they expected to increase professional staff headcount in 2005, and 70% said they wanted to take on more partners.

The harsh reality is that to sustain average fee income growth of 11.3%, a supply of qualified staff is essential. Against a backdrop of furious recruitment activity that has seen Big Four firms and large businesses going head to head for the crème de la crème of talent, the skills shortage should not be taken lightly ­ and no firm is immune.

Stevan Rolls, head of recruitment at Ernst & Young, which saw a 4% reduction in professional headcount, admitted the last 12 months had been a struggle. ‘The recruitment market is increasingly competitive. Not only is there more competition from industry, particularly banks, but from the mid-tier too. There’s a risk it could inhibit growth.’

More than just a headache for firms, new research suggests a dearth of talent could actually be fuelling attrition rates, as an epidemic of burnout sweeps the profession. Just last week, a survey conducted on behalf of recruitment company Hudson found that more than half of British accountants had experienced symptoms of over-work in the last six months, with 59% of employers and 73% of employees saying they now had less people to do the same or more work.

With recruitment visibly high on the agenda, staff attrition rates are an important metric, so it’s surprising how few firms are either willing or able to provide such data. After all, tackling the problem is only possible when you know what you’re up against.

Of the Big Four firms, Ernst & Young was the only one to volunteer hard statistics, admitting that overall staff turnover currently stands at 37%. Figures may be lacking but even bullish PricewaterhouseCoopers admits it is having to be increasingly creative to capture the imagination of more mature candidates, even advertising in airports and on sandwich wrappers. KPMG, meanwhile, has resorted to casting a wider net to plug its skills gaps.

But average attrition rates across the Top 50 currently 18% across all staff, rising to 26% among newly-qualifieds ­ conceal the true extent of the problem. Among mid-tier firms, it’s not uncommon for a third to a half of newly-qualifieds to leave over the course of a year.

Recruiting from abroad not only means that KPMG isn’t competing with rival big firms in the UK, but as Susan Newton, the firm’s HR boss , said back in April, ‘we improve diversity in the firm which makes us more attractive both to graduates and our clients.’

The idea sounds great on paper, but in reality only 4% of the firm’s partners come from ethnic minorities ­ incidentally the average across the Top 50 as a whole. Apart from marking no increase on last year, the average conceals an all-too-familiar reality. Of those firms that provided figures on the ethnic makeup of their partners, 39% admitted they had no partners from ethnic minorities, compared with less than one third last year.

Meanwhile, the striking gender imbalance across the senior echelons of the profession is alive and well. The proportion of female partners across the Top 50 has increased one percentage point in the past 12 months to 9%. It’s small consolation that the proportion of firms with no women at partner level has remained static at 10%.

True diversity remains a pipedream, and it’s time, as they say, to wake up and smell the coffee. There’s a war for talent, and it’s a sad reflection on accountancy that so little headway has been made in promoting the profession as one where diversity and equality reigns ­right up to the top. Until that time, recruiting the brightest and best to support growth across the sector will always be an uphill struggle.