The Top 50 2008: Firms branded hypocrites over missing profit figures
Over three quarters of firms fail to disclose their own profitability amid claims of hypocrisy
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’.
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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