When reports emerged that rival accountancy firms were holding virtual meetings to discuss the potential accepting of government assistance during the global pandemic, it was a sign of drastic things to come. Two weeks after said meeting, each of the Big Four accountancy firms, as well as mid-tier firms BDO and Grant Thornton, have all announced measures to mitigate the financial impact of coronavirus.
Who are the Big Four?
The ‘Big Four’ accountancy firms is a nickname given to the four largest professional services in the world. These four consist of Deloitte, EY, KMPG and PwC. They are grouped together for a number of reasons;
- Size – both revenue and workforce
- The scope of services they offer (audit, taxation, actuarial and consulting services, to name but a few)
- They are considered hugely attractive to work in due to the frequency in which they engage with firms in the Fortune 500.
For most of the 20th Century, there were eight firms, until a number of mergers and the collapse of Arthur Andersen after the Enron Scandal, led to the four we know today.
BDO and Grant Thornton, as well as Mazars, are the largest accountancy firms outside of the Big Four.
Which accountancy firms have furloughed staff?
It was announced last week that BDO have furloughed around 700 members of staff, including all first year trainees and apprentices as well as support staff. Paul England, a managing partner at BDO warned that “normal trading conditions will not return until early 2021”.
BDO are currently the largest firm to furlough staff, with one Big Four firm confirming to Accountancy Age that they will not be using the furlough scheme.
Mazars have furloughed 200 employees. Those that have been furloughed are in teams whose workloads have declined since the pandemic.
It is also looking increasingly more likely that Grant Thornton will be furloughing staff. It was reported at the start of the month that it had asked employees to volunteer for drastic pay cuts and reduced hours or face job losses. Unsurprisingly, only 150 of its 4,500 employees agreed to this.
Which accountancy firms have cut pay?
The Big Four have avoided furloughing staff for now, but that hasn’t stopped them cutting pay.
All of the four firms have cut partner pay, some by up to a quarter. There are also freezes in promotions, pay rises and bonuses. PwC’s staff appraisal programme, which usually starts after 31st March, has been delayed until the Autumn. Some measures include delaying profit distributions to partners, which were up 7.4% last year.
Deloitte have also followed suit, deferring partner profit distribution payments and implementing pay cuts for senior staff. Partner annual earnings are expected to decline by around 20%. Bonuses, pay rises and promotions have all been put on hold. Other measures also include offering the option of reduced working hours while maintaining full salary.
EY are also cutting partners pay by 20% to prevent furloughing staff and pay reductions. KPMG are also slashing partner pay by 25% in order to mitigate job cuts. The wider workforce are also due to expect significantly reduced bonuses, if at all.
The mid-tier firms, along with furloughing staff, have also cut partner pay. BDO have cut monthly pay to partners by up to 25% until the end of this year. Grant Thornton partners have agreed to take a pay cut when they need to, according to its chief executive. Mazars will also cut partner pay by a quarter.
Which firms are suspending their graduate recruitment?
As mentioned, some firms have furloughed their first year trainees and apprentices, but what about those hoping to start a job with them in September?
Most firms are still planning to take on their graduate intake this year, and are continuing to recruit for their 2021 graduate programmes. However, there are some exceptions.
BDO have paused their recruitment for now, and cancelled their summer internships.
PwC have cancelled their internships, but those students have been offered alternatives. This includes automatic entry onto their graduate programme in 2021. New recruits starting this September will be trained online and their summer work experience programme will be offered digitally to all applicants.
The other Big Four firms have not disclosed any changes to their graduate recruitment.
The long term impact of the coronavirus on the economy and more specifically, the finance industry and graduate recruitment, is still yet to be seen.