Partners at Deloitte UK will receive their biggest payday in a decade despite criticism of large accountancy firms over the quality of their audit work.
The firm’s 699 equity partners will be handed an average profit share of £882,000 for the year to June 2019, a rise of 6 per cent on the previous year, and the largest payout in 10 years.
The average equity partner working at Deloitte for the past decade has earned a profit share of more than £9m since 2009. Equity partners take a portion of profits, typically allocated by seniority and performance, instead of a salary.
PwC’s UK partners made an average of £712,000 last year, EY partners made £693,000, and KPMG partners made £601,000. Deloitte is the first firm to report its 2019 financial results.
The figures highlight the rich rewards on offer for partners of the Big Four and could give further ammunition to critics who have accused the accounting firms of anti-competitive behaviour and conflicts of interest. Last December, the competition watchdog proposed a radical overhaul of the UK audit market, including forcing the Big Four to split their audit and consulting businesses.
Deloitte said UK revenue, which also includes fees made by its Swiss division, increased nearly 11 per cent to £3.97bn.
The firm’s consulting practice made fees of £952m last year; its tax and legal unit made £862m; and its audit and assurance division made £582m.
Distributable profits before tax rose to £617m from £584m, due to a one-off gain on the sale of an investment as well as currency fluctuations.
“Our 2019 results reflect the long-term investment we have been making across our business and, in particular, in audit quality and the training, technology and talent required to support it,” said Richard Houston, chief executive of Deloitte in the UK and North and South Europe. “This investment has helped us succeed in the market and improved the financial performance of our audit business.”
There was a decline in the quality of Deloitte’s audits for FTSE 350 companies in a regulatory inspection this year. The Financial Reporting Council said 75 per cent of its audits required no more than limited improvements, down from 79 per cent in 2018.
Stephen Griggs, head of audit and assurance, said Deloitte was reviewing how to adapt the scope of its audits to match changes in company annual reports, but he added that it rejected proposed reforms “that would see any form of separation of the audit business from the rest of the firm”.
Mr Houston, who took over as chief executive in June, attributed some of the growth in fee income to Brexit. He said that over the past year Deloitte had helped both the public and private sectors to “navigate the changing and challenging backdrop, whether helping manage the uncertainty of Brexit, transforming businesses through the use of digital technologies, or addressing critical risks such as cyber”.
Deloitte has 1,070 partners including salaried partners, of which 21 per cent are women.
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