Partners at professional services giant Deloitte in the UK are set for a 17% pay cut because of the Covid-19 pandemic’s impact, its annual report has revealed.
Revenues actually rose at the company by 9.1% in the year to the end of March. However, the swiftness of the onset of the pandemic meant it was unable to cut costs fast enough in response to the slowdown.
The 709 equity partners of Deloitte’s UK arm will receive an average payment of £731,000 for the year to the end of May 2020. This is down from a record £882,000 in the previous financial year.
Equity partners take a share of profits instead of a salary. The firm’s distributable profit was £518m, a fall of 16% on the £617m Deloitte made a year earlier because investment levels had been set assuming uninterrupted growth in the business.
Donna Ward, Deloitte’s chief financial officer, said: “As a consequence of the pandemic, the firm’s growth has been less than planned. We have carefully managed our resources throughout this period, implementing cost containment and liquidity enhancement measures so as to ensure the long-term resilience of our firm. We continue our focus on operational and financial resilience while also making considered, but strategic investment choices.”
The annual report included a provision for the record £15m fine and £6m of legal costs it received from the accountancy regulator for failures in its audit of Autonomy, the British software company. Deloitte was found to have failed to act with “competence and due care and professional scepticism” in its audit of the accounts between January 2009 and June 2011.
The strongest divisional performance was that of consulting, with revenues up 12% as Deloitte gained new work advising on efforts to combat coronavirus.
On top of helping corporate clients redesign working practices, and strengthen their supply chains, the firm was hired by the UK government to help co-ordinate its emergency response measures. Among the £109m-worth of contracts awarded to consultants by Whitehall departments early in the crisis, Deloitte’s included managing procurement of personal protective equipment for hospitals, and supporting testing sites – although the firm drew criticism for a series of administrative errors and delays in providing kit.
The report revealed that the company’s audit and assurance division increased revenue by 8.7%. Financial advisory rose by 5%, while the tax and legal division saw its revenue rise by 7.1%.
Today (1 October) the company drew more criticism for its work on coronavirus as its attempts to sell councils a “local test and trace solution” being described as profiteering by senior public health figures.
Local Government Chronicle says it has learned that Deloitte, which manages the logistics of national drive-in testing centres, super-labs and mobile testing units under NHS Test & Trace, has formed a partnership with US software firm Salesforce to offer a product it claims can give a “single view of all the test and trace activity in your local area”.
One public health director said the marketing approach felt like an attempt to profit from weaknesses in the national system.
The annual report included details of the company’s ethnicity pay gap, provided voluntarily. There were minimal increases on the mean and median hourly pay gap figures but this, wrote Dimple Agarwal, deputy CEO and managing partner for people & purpose, “was expected as our efforts to recruit a more diverse workforce have led to an increase in the proportion of our colleagues from ethnic minorities at our more junior levels”.
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