UK accountancy firms’ health is positively blooming for the second year in a
row with double digit growth and combined revenues of almost £9bn, according to
the most comprehensive survey of the UK profession.
Combined fee income has raced ahead to reach £8.7bn, a rise in excess of £1bn
on last year’s revenues which stood at £7.62bn, which was itself a rise of 13%
on 2005. Revenues rises however belie slower growth than last year, with average
growth rates of 13%, compared to 15.5% in 2006.
Again the strongest growth is among the Big Four firms which this year boasts
a combined income of £6.35bn, up £850m on last year’s £5.5bn.
PricewaterhouseCoopers’ income is now just shy of £2bn. But it is the
smallest of the Big Four Ernst & Young that saw the fastest growth rate at
20% raising incomes to £1.1bn and significantly widening the gap between the Big
Four and the next biggest firm Grant Thornton to £742.9m. This compares to last
year’s difference of £660.9m, despite Grant Thornton merging with RSM Robson
Rhodes to provide it with a boosted income of £387.1m, a £100m increase on last
The lion’s share of revenues among the Top 50 continues to come from audit
and assurance with £3.3m earned. Tax work is not far behind notching up £2.3bn
in combined income.
Growth outside the top 20 firms is mixed, with some standing out from the
crowd such as Haslers with growth of 24%, CLB Littlejohn Fraser at 11% and
Armstrong Watson at 14.4%.
For the second year running, however it is Wenham Major that really shines
among the smaller firms. This year the firm made a phenomenal leap, jumping 20
places from last year’s initial entry at 43, to 23, and growing at 92%. The
eight-strong partner firm earns average fees per partner of £2.4m, a figure to
comfortably rival Big Four partners’ earning power, and has a better sex
equality than most among the Top 50 with 87% male and 13% female partners. Once
again what is fuelling their growth is primarily tax work, raking in £10.5m,
while audit and assurance work provides partners with a mere £1.9m.
In stark contrast to the general push for equality between the sexes at all
levels of the workplace Morley and Scott is the only firm to have a woman as
chief of the firm, the rest are all led by men, once again reinforcing the image
of the accountancy profession as a male, white dominated industry.
The statistic also further reinforces research from London Business School
which recently found that women have more success in progressing up the
entrepreneurial ladder in companies where other women are chief executives. The
research found that women are unlikely to flourish in business where fewer than
30% of the senior executives are not already female.
On average among the Top 50 firms the percentage of female partners was 10%,
while men dominated the partner ranks again at 90%. Despite the abysmal ratio,
figures have improved fractionally on last year where average percentage of male
partners was 91%. Interesting, however, is the fact that the average proportion
of female qualified accountants dropped on last year’s results to 35%. In 2006
on average 37% of qualified accountants were female.
Representation among partners of people from ethnic minorities on first
glance has improved. An average percentage of partners from ethnic minorities
came in at 5.9%, meaning around one in 15 partners are from ethnic minority
backgrounds. It’s a rise on 2004 where 4% were from ethnic backgrounds. This
year’s figures compare favourably with the average percentage of black and
ethnic minorities living and working in the UK at 7.9%.
A spokeswoman for the Commission for Racial Equality says: ‘It’s fairly good.
It could of course be higher but a lot of industries are much lower.’
However the figure is propped up by most firms outside the Big Four. The
combined average percentage among Britain’s biggest firms is shockingly low at
only 3%, a fraction of the national average. At 2% PwC has the weakest track
record in recruiting and nurturing talent to partner level from ethnic groups.
The CRE says: ‘That’s where the discrepancy is. The Big Four aren’t
representative. Smaller firms are often exclusively Asian. Their high average
pulls up the rest of the Top 50.’
Indeed there is evidence of this among the smaller firms in the Top 50 with
DTE group, 25th in the Top 50 with 25%, Mercer & Hole (44th) with 19% and
Shipleys (45th) with 10%.
The CRE suggests the reason the Big Four are unrepresentative is because they
recruit mostly from the country’s top 12 universities, which also suffer from
low rates of ethnic representation. There are more ethnic minorities studying at
The South Bank University than in the whole of the top 12 universities combined,
the CRE says.
The vast majority of firms however claim to have a diversity and/or equality
policy in place but only seven firms out of 50 have a dedicated diversity
director. Still, the latest research from the CRE found that employment is the
leading issue among ethnic minority communities. The CRE received more than
5,000 complaints over the last six months and found that a staggering 43% of all
complaints were linked to employment.
After thirty years of race relations and legislation protecting ethnic
minorities at work, the CRE says it is appalled that racism in some workplaces.
The most common complaints cited by ethnic minority people to the CRE are
workplace bullying, lack of career progression and being unable to secure
On a more upbeat note the majority of firms remain optimistic of continued
growth with most having plans to recruit this year. However this must also be
seen in the context of high attrition rates, which reach as much as 30.3% among
newly qualifieds and 15.9% among all staff.
Only 11 of the Top 50 firms have an official company wide policy on reducing
their corporate carbon footprint, although all of the Big Four have a policy.
PwC said it reports annually on its environmental targets. Deloitte,
meanwhile, counts among its measures to reduce the firm’s carbon footprint the
use of renewable energy in buildings and the launch of a corporate charge card
which will offset carbon emissions from travel.
KPMG, leader in implementing environmentally friendly initiatives among the
Top 50, is reducing emissions through introducing alternatives to business
travel, promoting video conferencing to reduce business travel and energy
efficiency in buildings.
Smallest of the Big Four, E&Y has introduced measures such as reforming
staff transport, carbon off-setting and energy efficient buildings. Change is
afoot but if the profession wants to retain its coveted economic success it will
need to look inward much more.
Mazars has announced the appointment of Michael Tripp as the new head of financial services
A new leader, Darra Singh has been appointed to lead EY’s UK government and public sector practice
MHA MacIntyre Hudson has partnered with cloud accounting software provider Xero ahead of the government’s requirement for digital records
Revenue and profitability growth in on the rise for CPA firms, found a survey from the American Institute of CPA’s and its subsidiary CPA.com