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By Irina Anghel, Bloomberg News (TNS)
Ernst & Young LLP partners in the U.K. saw their share of profits drop for the first time in three years as the Big Four audit firms face economic uncertainty.
Partners at the accounting firm’s U.K. arm pocketed an average of £761,000 ($923,000) last year, compared with £803,000 the year before. The firm also cut its pay rise and bonus pool by about 30% to £155 million.
EY U.K. recently announced it’s cutting 5% of staff in its financial services division to adjust to slower demand this year. Accountants at the Big Four firms—which also include Deloitte, PricewaterhouseCoopers (PwC) LLP and KPMG LLP—are clinging to their jobs amid economic uncertainty and a sharp drop in open roles.
EY U.K.’s pretax profit increased 4% to £659 million in the year to June 2023, while revenue rose 16% to a record £3.8 billion. Revenue growth was driven by a 20% gain in its tax business and a similar rise for its consulting division.
The Big Four accounting firms are facing increased scrutiny over the quality of their audits after a series of high-profile collapses in recent years, including British construction company Carillion Plc and cake chain Patisserie Valerie Ltd.
EY’s 2021 audit of Made.com Group Plc, which filed for insolvency last year, is being investigated by the U.K. regulator, the Financial Reporting Council. The firm, which now has more than 21,000 staff in the U.K., said it revamped its audit quality strategy in 2020.
A long-awaited legislative overhaul of the U.K.’s audit industry is still needed, said EY UK Chair Hywel Ball.
“While the profession and our U.K. regulator have sought to implement our own changes, the lack of primary legislation in this area continues to be a concern,” he said.
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