The future of accounting – how the Big 4 shake-up will affect your career

Changes to the accounting landscape could open up new horizons for professionals, says Nicole Burstow, a former audit director at Deloitte and now FD at Dow Schofield Watts

nicole burstow

Amidst the disruption and uncertainty of recent years, the accountancy profession has remained a bastion of tradition – in terms of its business models, its working practices and its culture. However, with the decision to make the Big Four firms separate their audit practices, the industry is set for its biggest shake-up in decades.

Since the announcement by the Financial Reporting Council (FRC) in July, Deloitte has put its restructuring practice up for sale, following the lead of KPMG which sold off its pensions arm last year. No doubt other restructurings will follow.

These changes by themselves are enough to reshape the market, but regulatory issues are not the only challenges facing the old order. Some of the bigger firms have also been facing financial pressures and looking to safeguard profits by restructuring and reducing equity partner numbers, which in turn has restricted career opportunities for staff further down the ladder. Meanwhile the industry has also come under fire for lack of diversity and its long hours culture.

So what will the future accounting landscape look like – and what do the changes mean for firms and for professionals themselves as they navigate their career options? Here are our predictions.

The outlook for audit

While the FRC’s edict stopped short of demanding a full break-up of Big Four firms, it does mean that audit departments – which are currently subsidised by other services – will have to stand on their own two feet. FRC plans to update standards could effectively create a double blow, by requiring them to invest further in audit quality and driving up costs.

Inevitably additional costs will have to be passed on to clients which will certainly not be popular as audit is frequently seen as a compliance exercise rather than adding value. Nevertheless, it is unlikely that the Big Four will face much competition – in audit at least. The requirements of larger listed companies are such that smaller firms are not equipped to service them and the “blue-chip” reputation of the Big Four is still favoured by most audit committees and other stakeholders. The FTSE 250 will have little scope to go elsewhere.

The future of non-audit services

However it is a different story for the other services. Separation will increase competition in the market but could also trigger wider changes. Service lines put up for sale could be attractive to a range of buyers – a management team, private equity firms, large corporates or international acquirers. Not all staff will be happy with the changes and no doubt some will seek new options and even set up their own operation.

Therefore a shake-up could result in the creation of more start-ups at the bottom of the market, larger specialist firms and the introduction of new business models. The landscape could soon look very different. Of course, there will always be a place for the big four, with their depth of expertise and their international networks, but there will be greater competition and a wider choice for clients.

New career horizons

Traditionally career options within accountancy have been more limited than in other sectors. The Big Four have long attracted the top talent who then work diligently to achieve partner status. However limitations on partner numbers are restricting opportunities for progression, while the long hours culture allows little flexibility. In particular the bigger firms struggle to retain women, who now account for over half of new graduate intakes.

The fact is that candidates have changed. Recruiters report that they are becoming more entrepreneurial and seeking greater autonomy and flexibility, while younger workers are more values-based. No doubt the Covid-19 pandemic will have exacerbated this trend, by creating a shift to home working and encouraging many professionals to rethink their career goals. Firms with alternative business models such as Dow Schofield Watts can readily tap into this talent pool by offering them a different vision.

Ultimately the changes will reshape the accounting landscape and disrupt the existing models, but they will also open up new horizons for professionals by offering them a wider range of options and greater control over their career.

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