Draft plans recently announced by the European Commission aimed at curbing the power of the Big Four accounting practices could lead to a hiring spree among the mid-tier firms as they prepare to compete in what may be a far more level playing field.
Historically, companies have rarely changed their auditors which has resulted in very few FTSE 250 audits for mid-tier firms. The draft EU plans include forcing companies to change auditor at least once every nine years and from a hiring perspective we are already seeing mid-tier firms ramping up their audit teams in the hope that if the directive is introduced they will be in a strong position to tender for big ticket work. Additionally, companies are constantly looking at ways in which to improve shareholder value and so mid-tier firms, if they have the right staff, could be a viable – and more cost effective alternative – to a Big Four audit firm.
Many of the mid-tier firms are managing to attract ex Big Four partners to help build out teams to win larger client audits – and larger fees. Another contributing factor to mid-tier firms wanting to woo larger clients is the recent changes in the financial services industry. Record revenues from PwC and Deloitte recently (largely as a result of their Financial Services Advisory Practices) have led mid-tier firms to look at building their own financial services practices – mainly by recruiting ex Big Four staff. The recent announcement around the ring-fencing of retail banks from their investment banking arms may mean separate audit, tax and consulting advice. The European Commission proposals would mean that many of the Big 4 will be conflicted out of tax or advisory work opening up further opportunities for the mid-tier.
However, a FTSE 250 company or large financial institution will only appoint a mid-tier firm if it feels that they are adequately resourced – firms need to act now to recruit top quality people if they are to be ahead of the curve when the changes are enforced.
John Newcombe is Director of the professional services practice at Twenty Recruitment and specialises in senior level and partner appointments within public practiceRead More