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.
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Satvir Bungar promoted to managing director in the mergers and acquisitions team
Carolyn Brown appointed as the first head of client legal services practice RSM Legal
UK senior partner Phil Verity has been elected for a second term at Mazars