EY partners set to take pay cut after growth slows
EY UK partners are set to take a pay cut this year after the audit firm today announced anaemic revenue growth of 1.5 per cent.
Average partner pay for the year ended 30 June slipped to £679,000 from £693,000 the previous year.
The firm said investments in tech and audit quality and an increase in the number of partners were the reasons for the fall in partner pay.
Revenue grew 1.5 per cent to £2.45bn, up from £2.41bn the previous year.
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Distributable profits before tax increased to £477m, from £472m last year.
EY’s UK chairman Steve Varley told City PM that the results reflected a focus on investing in the firm’s audit quality and its technology and infrastructure.
“This last financial year was an opportunity for some internal tidying up,” he said.
Varley said the firm’s investments should bear fruit in the current financial year.
“We have won several large audits this last year, like Vodafone, SSE and Burberry. What you will see next time round is more growth because of the investments we have made… you will see more top line growth and probably the same level of profit per partner,” he said.
“We have had a strong start to the year, despite the headwinds of potential global trade challenges between the US and China and lack of clarity on our trade relationship with the EU,” Varley said.
The audit sector is facing unprecedented political scrutiny after auditors were implicated in a series of company collapses.
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EY is facing an investigation from audit watchdog the Financial Reporting Council (FRC) over the collapse of travel company Thomas Cook earlier this year.
Varley said he was pleased that the firm’s audit quality rating was the highest of the Big Four firms.
He also called on the government to speed up the transition from the FRC to the Audit, Reporting and Governance Authority (Arga), the body that is set to replace it.
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“I’d like to see is the government accelerate its efforts to create Arga from the FRC, we have always welcomed the creation of Arga,” he said,
Varley also pushed for the creation of a UK regime, similar to the US Sarbanes Oxley system, that would make company executives more accountable for corporate failures.
“We also asked the government to look very closely at the UK adapting the Sarbanes Oxley regime for the UK. We think that would provide the right type of protection for investors, pensioners and suppliers,” he said.
Fellow Big Four firm Deloitte reported a six per cent jump in partner profits to to £882,000 this year, with revenue for the firm in the UK and Switzerland up 10.9 per cent from £3.58bn to £3.97bn.