Annual revenues at London-based accountancy business Ernst & Young have increased by eight per cent.
The “Big Four” accountancy firm worked on banking reform and fraud investigations over the year, while it also handled the collapses of retailers TJ Hughes and Focus DIY near the end of the period. However, revenues were trimmed back by the tough market for company deals experienced by its corporate finance arm.
Ernst & Young’s overall revenues for the year went up to £1.47bn, while profits per partner increased marginally from £629,000 a year ago. The firm’s UK arm now has a total of 527 partners after adding 42 during the year. It also helped a number of clients move into Brazil, China, India, Russia and other emerging markets around the world.
The accountancy firm registered double digit growth in financial services because uncertain conditions in the sector have led to a number of proposed and new regulations on solvency and capital for insurers, banks and other financial businesses. Tax revenues were largely flat.
Its audit division was boosted by an increase in investigations, disputes and other fraud work, while strong demand across all sectors dealt with by Ernst & Young’s consultancy arm pushed it up a fifth.
The year included plenty of corporate restructuring work for the accountancy firm. The majority of TJ Hughes’ shops were shut when it entered administration in June, although some were bought by Lewis’s Home Retail. Most of Focus DIY’s stores closed when it slipped into administration in May, but around 50 shops were sold on, with 31 purchased by B&Q owner Kingfisher.
Ernst & Young has put in a strong performance despite the uncertain market for accountancy firms. The sector could be referred to a competition inquiry by the Office of Fair Trading because of possible conflicts of interests and the standard of published accounts.
Meanwhile, proposals to ban auditors who also offer consulting services to clients were proposed by the European Commission last week.
Ernst & Young was subject to heavy criticism in 2010 for its role as auditor to Lehman Brothers. An official report into the bank’s collapse mentioned a “failure to question and challenge improper or inadequate disclosures”.
The accountancy firm’s UK arm employs 9,240 staff, while the global group has 152,000 employees. Its London office is located in Lambeth.
UK managing partner Steve Varley said: “We made the decision several years ago to increase significantly our investment in the business and once again this year’s growth demonstrates that taking a longer term view pays off.”