We wanted to take this opportunity to wish you a happy festive season and to say thank you for being a loyal reader and member of the Accountancy Age community!
We hope to take some time to rest over the next few weeks and come back recharged in 2025. As you enjoy your break, we wanted to resurface our top articles from 2024 to inspire you as you head into a new year.
We have also included a Christmas Special – our final executive interview of the year. A big thank you to Carl Lundberg, CEO of Gerald Edelman for giving up his time so close to the holidays.
This will be my last newsletter as Editor of Accountancy Age. It has been a pleasure to cover the UK accountancy market for the past two years, and I will miss engaging with you all through our newsletters, articles and interviews. I am handing over the reigns to Marina Mouka, who will resume coverage in the new year. Wishing you all the best,
Rachael Kennedy Editor, Accountancy Age, & Head of Content, Contentive
A little Christmas Special
Gerald Edelman, a boutique accounting firm with roots dating back to 1946, has achieved B-Corp certification under the leadership of CEO Carl Lundberg, marking a significant milestone in its evolution from traditional accountancy to purpose-driven business.
The journey, which resulted in an impressive B Impact Score of 84.5, required the firm to formalise its existing environmental and social initiatives while navigating complex challenges, including partner resistance and client portfolio adjustments.
The certification represents more than just a badge for the firm—it’s a strategic move that’s already yielding benefits in talent attraction and client relationships, with Lundberg setting ambitious goals to push their impact score even higher in the future.
TOP 10 ARTICLES
In at number 10: Big Four to focus on governance following regulatory pressure
Just as Santa keeps his naughty and nice list in check, the Big Four announced they would be tightening up their governance structures. The accounting giants that employ 1.5 million people worldwide are responding to regulatory pressure by strengthening oversight and accountability measures.
“The current governance of the Big Four encompasses the worst aspects of partnership governance and the worst aspects of corporate governance,” said Laura Empson, a professor specialising in the management of professional service firms at the University of London’s Bayes Business School.
Sliding in at number 9: FRC publishes final settlement decision to KPMG on Carillion
KPMG received an unwelcome early Christmas present this year in the form of historic sanctions from the FRC. The £21 million fine (reduced from £30 million) marked a significant moment in the long-running Carillion saga.
The sanctions also include severe reprimands and an order for KPMG to reassess and report on its current measures to prevent similar breaches. The firm is also required to cover the Executive Counsel’s costs of both investigations, amounting to over £5 million.
Decking the halls at number 8: What’s going on at Grant Thornton?
While some might be trimming trees, Grant Thornton has been trimming staff numbers, with 350 employees affected in their latest round of cuts. Despite the restructuring, the firm maintains it’s still on track for strong performance.
At the time, the impetus behind Grant Thornton’s recent restructuring efforts was traced back to its plans to sell a majority stake to New York-based private equity firm New Mountain Capital. The transaction, which is subject to regulatory approval and other standard closing conditions, is expected to be finalized in the second quarter of 2024.
This move towards a private equity-backed structure is not unique to Grant Thornton. Across the accounting landscape, firms are increasingly exploring alternative practice models and seeking external investment to fuel their growth and adaptability.
Jingling in at number 7:
Accountancy Age announced 50+50 for 2024 Like making a list and checking it twice, our annual ranking of the top 100 UK accountancy firms provided crucial insights into the industry’s diversity, technological investment, and financial performance.
In this year’s rankings, in partnership with Source Advisors, there was little change among the top ten firms. But there was some reshuffling among the challenger firms – Evelyn Partners has bumped Grant Thornton down a spot, taking 6th place this year. Evelyn Partners reported a total fee income of £701 million, compared to Grant Thornton’s £654 million.
Among the top ten, in terms of % change in fee income, Forvis Mazars in the UK and BDO came out top, both reporting 16% growth. RSM reported the highest fee per partner – £3.9 million; this was second only to CBTax (£9.49 million in fees per partner) which only employees two partners. RSM UK currently has 134 partners employed within its ranks.
PwC maintained the top spot with a fee income of £6.32 billion, a 9% increase from 2023 – this is the first time a member of the Big Four has breached the £6 billion mark.
Deloitte once more played second fiddle, but did cross the £5 billion rubicon, reporting total fee income of £5.7 billion for 2024.
Dashing through at number 6: The rise and fall of EY’s Project Everest
EY ‘s ambitious splitting plans came tumbling down like a poorly decorated Christmas tree, leaving behind a $700 million debt burden. The firm was expected to have this cleared by July 2024 – a New Year’s resolution they’ll be keen to keep.
The financial consequences of Project Everest were not limited to the debt burden. EY’s global professional fees, which encompassed the costs associated with the project, surged from $857 million to $1.5 billion in the same period.
These figures highlight the significant investment the firm made in terms of both financial resources and manpower towards the failed endeavour.
Taking the number 5 spot: How AI is revolutionising Accounting
While not exactly Rudolf’s glowing nose leading the way, AI is illuminating new paths for accountants, automating routine tasks and enabling more strategic work. This technological revolution is proving to be the gift that keeps on giving for the profession.
From using predictive analytics to improve decision-making to offering personalised client insights through AI, the potential for transformation is vast. For example, AI is making complex accounting standards like ASC 842 (lease accounting) easier to navigate. This reduces the burden of compliance and allows accountants to focus on providing strategic advice.
Additionally, AI’s ability to process and analyse data in real-time paves the way for more dynamic and responsive financial planning and analysis. As AI technology continues to evolve, its integration into accounting practices promises not only to increase efficiency but also to elevate the strategic value accountants bring to their organisations and clients.
Climbing down the chimney at number 4: Forvis Mazars launches $5 billion global network
Like an unexpected present under the tree, this landmark partnership created the largest new entrant into global rankings in decades, promising to shake up the professional services landscape.
As a two-firm network, Forvis Mazars is unique in the market and provides the agility, capacity and coverage to support clients wherever in the world they operate. This move brings increased choice in the market, serving the public interest.
“We are well positioned to deliver excellence, everywhere, under a single global brand. Clients will get consistent, high-quality, comprehensive services worldwide, and we remain agile and flexible to their specific needs. I am extremely proud to serve as first Chair of the Global Network Board. Working together, I am confident that our two firms will continue to empower our people to raise the bar for client service standards, while challenging industry opportunities to support future needs in local markets.” – Hervé Hélias, Chair of the Global Network Board
Securing the bronze at number 3: Deloitte undergoes major restructuring
As if inspired by holiday home reorganising, Deloitte implemented its biggest restructuring in a decade, consolidating five business units into four. A reminder that sometimes the best presents come in more efficiently wrapped packages.
A key aspect of the restructuring involves consolidating Deloitte’s five core business units into four. The new structure will focus on:
- Audit and Assurance: Providing independent verification and assurance services for clients.
- Strategy, Risk and Transactions: Combining expertise in developing business strategies, managing risks, and facilitating mergers and acquisitions.
- Technology and Transformation: Helping businesses leverage technology for innovation and process improvement.
- Tax and Legal: Offering clients a comprehensive suite of tax and legal services.
Taking silver at number 2: The PwC Australia Tax Scandal
Not all surprises are welcome ones, as PwC Australia discovered when their confidentiality breach came to light, leading to global investigations and raising questions about ethics in the profession.
At the heart of the scandal was the alleged misuse of sensitive government information by Peter Collins, PwC Australia’s former international tax chief. The key events and actions that led to the scandal began with the initial breach of trust in 2015, when Collins breached confidentiality agreements by sharing insider intelligence on upcoming multinational tax laws with PwC colleagues.
The shared information included government plans, meeting agendas, and confidential drafts from the OECD on tax avoidance schemes. This breach enabled commercial exploitation, as PwC formed a global team to leverage these insights for commercial gain, particularly targeting the US market. This strategy resulted in approximately $2.5 million in revenue, as PwC advised 14 US companies on how to navigate the new tax laws before they were enacted.
And the most-read article of 2024… How much of a threat is the talent shortage to the accounting profession?
With 75% of US CPAs reaching retirement age and student enrollment declining, the talent crisis topped our readers’ concerns this year. Like trying to find seasonal workers in December, the accounting profession faces a critical staffing challenge that shows no signs of easing as we head into 2025.
“Firms have got a lot of other work that is important for their client needs and they are stepping back and looking at their business models and saying, what space do we want to be in?” asks Sue Coffey, CEO of Public Accounting for AICPA & CIMA.
One key strategy for attracting new talent to the accounting profession is rebranding. Traditionally, accounting has been seen as a mundane and monotonous profession. However, today’s accountants are far from that stereotype.
They are forward-thinking individuals who leverage technology, possess strong analytical skills, and play a crucial role in driving business success. Firms need to emphasise these selling points and showcase the exciting and diverse opportunities that the profession offers.
As we wrap up 2024, these stories reflect a year of significant change, challenges, and evolution in the accounting profession. Here’s to hoping 2025 brings more positive headlines – and maybe a few more aspiring accountants down the chimney!