Financial Reporting Council chair and stereotypically European named Jan du Plessis has told the Financial Times that audit firms — who regularly complain about the UK audit regulator being up their asses — should pay their junior auditors more. “There has been a significant increase in profitability at all the audit firms. They have the resources available to increase the pay levels of more junior people that they want to attract into their firms and it’s up to them whether they want to do so,” he said.
CFOs at the UK’s largest companies complained about rising audit fees in a letter to Big 4 leadership last year. And we have all heard the complaints from junior auditors.
Senior partners at the Big Four — Deloitte, EY, KPMG and PwC — have claimed that criticism from politicians and regulators, including high-profile fines for poor work, is making it more difficult to recruit and retain auditors.
But Sir Jan du Plessis, chair of the Financial Reporting Council, hit back, denying that the watchdog’s tough approach had made the profession unappealing.
It isn’t just Big 4 firms complaining about the FRC’s heavy hand. Earlier this year, auditors at the mid-tiers said that increased scrutiny from the FRC is only “cementing the oligopoly” of Big 4. “The regulatory pressure is becoming unbearable,” griped a senior auditor. Meanwhile, FRC CEO Sir Jon Thompson has told firms to knock it off with all the complaining and focus on improving their work. “It’s no good complaining about the fines,” he said in an interview with FT. “The solution is entirely in [firms’] hands. Do a good audit and you don’t get in trouble with us.” Haha git gud, scrubs.
Back to FT:
Average partner pay at the Big Four has soared in recent years, passing £1mn a year at two of the firms [Ed. note: Deloitte and PwC passed £1 million in partner pay, KPMG came in lowest at £757,000 ($954k USD)]. But with the exception of big increases last year as inflation soared, pay rises for junior auditors have been small over the past decade, and have failed to keep pace with salary growth in law and consulting.
PwC raised average pay for its London-based audit graduates to £32,000 last year, roughly half the salary of the City’s best-paid legal trainees.
Du Plessis, former chair of BT and Rio Tinto, said the difficulty auditors faced recruiting the right people was no different to that in many other sectors. Accounting bosses fear that staff shortages will be exacerbated by increasing demand from companies for external validation of their climate disclosures in addition to traditional financial statements.
“If you’re a young person today looking to join a profession, I’d have thought you’d want to join a profession that sets very high standards,” he said of the FRC’s aggressive enthusiasm for audit quality.
Big Four accounting firms urged to pay junior auditors more [FT]