BDO partners see payouts drop following £70m hiring spree
BDO’s managing partner today said the firm will continue investing in long-term growth after partners saw their payouts drop 15 per cent as the result of a £70m spending spree.
Speaking to Morning Wire Paul Eagland also refused to rule out a firm-wide split as he signaled BDO may follow EY in separating its audit segment from its advisory business.
Eagland’s comments came after BDO’s partners saw their pay drop 15 per cent, to £647,000 for the financial year 2021/22, after a £70m recruitment drive hit the accounting firm’s profitability.
The hiring spree saw BDO invest £70m into hiking salaries, promoting 3,000 people internally, and hiring 1,000 new staff in a drive that saw it boost its headcount from 6,000 to 7,000 people.
Internal promotions, paired with external hires, also saw BDO boost its partnership numbers by 59, bringing its partnership to record high levels of 431 partners.
Speaking to Morning Wire, BDO’s managing partner Paul Eagland said the firm will “continue to invest” in boosting audit quality in its bid to capitalise on the prospect of higher audit fees.
Eagland said higher expectations from regulators will “have an impact on audit prices” going forwards, that could see the cost of audits increase by “up to 50 per cent”.
He noted companies that invest in proper controls could however cut their audit costs, by allowing for more “efficient” audits, as he called for greater clarity on what is expected on the corporate side.
The managing partner noted that a “high percentage” of BDO’s clients continue to have “very strong balance sheets,” as he argued the firm’s investments will enable it to capitalise on continued demand.
Eagland however warned that businesses require “transparency and clarity” in order to make investment decision, as he called on the government to put forward a “stable strategic policy”.
He argued businesses favour “honesty… even if that doesn’t give them the perfect answer that they want.”
Eagland continued in urging the government not to make the same mistakes made by Liz Truss as he called on the current government to be open about its plans to “balance the books” and subject them to proper scrutiny.
“The OBR produce very good quality reports,” Eagland said.
BDO’s hiring spree came as its revenues increased 11 per cent, to £809m, on the back of growth across all three of its business lines.
Revenues from BDO’s audit practice grew 17 per cent to £324m, as the firm took on 341 new auditors, boosting its audit headcount to 2,600.
The firm’s tax practice saw its revenues increase 3 per cent to £199m, while revenues from BDO’s advisory business increased 10 per cent to £286m.
The results come as Big Four accounting firm EY pushes forwards with plans to separate its advisory business from its audit practice, in what could be the biggest shakeup of the sector in decades.
Eagland said that while BDO is not currently investigating plans for a split in “any detail” the firm will continue monitoring EY’s progress “over the next five years”.
The managing partner also warned that tough action from regulators is making it harder to recruit audit staff, as he warned of the “negative side effects” of watchdog-led investigations.