It started in the mid-2010s
It has long been contrary to both the Companies Act (Chapter 9, Section 17) and the Audit Act (Chapter 17, Section 4) that an auditor of a company may not at the same time have a colleague, under the same principal, who performs so-called asset management in the client company. In simple terms, this means that if you have an audit assignment in a company, you yourself, and all your colleagues within the group, must stay away from all accounting, reconciliations, payments, financial statements, etc. in that company. (On the other hand, you may, for example, prepare income tax returns, annual reports, sell tax advice, etc.)
Partly to avoid these restrictions, Pwc, and later KPMG, sold their entire accounting operations to what is now Aspia (and Deloitte has recently done the same to another large accounting group). There is recurrent speculation in the industry about when EY and GT, for example, will do the same. In order for them to get away from the so-called ‘combi assignments’ they often take on today: Despite what laws and regulations say, they handle both auditing and accounting in many client companies.
They got private equity companies as owners
Aspia is now owned by private equity firms. And it was also private equity companies that bought up the accounting operations already when Pwc and KPMG sold. As a consultancy firm, being bought by private equity firms normally means much greater pressure to earn more money than before.
When the purchases were made, there were two sellers (Pwc and KPMG) who quite naturally wanted to be paid as much as possible. In the day-to-day business, this means that all employees within, for example, Aspia, must start charging more for their services from you as a customer. So that the owners/venture capital company can get a return on their purchase of business.
“…all employees must start charging more for their services…”
The pressure on the individual accountants in the organisation will of course be much greater. Charge, charge, charge. Charge the client more. Automate to speed up execution – but still keep charging the client more and more, etc.
Recruitment
In their quest to make more money from their existing client base, the big accountancy firms need to cut costs. And the big cost is staff. They are forced to bring in more cheap labour (compared to the average salary in the companies) i.e. people who accept lower salaries.
“…the big accountancy firm becomes more and more just a simple accountancy firm for the client…”
Most of the recruits are therefore taken directly from schools. This means that the quality of the work is reduced but, above all, that consultants are brought in who, for obvious reasons, do not have the experience and skills to be business-driven in their relationship with customers. ‘The big accounting firm’ is instead becoming more and more just a simple accounting firm for the customer.
The next effect clients notice is that graduates soon tire of the ‘big firm’. Partly because the salaries are poor, more time is required, the requirements are tough, but also because there are few educated people who take their first job as an end stop. There is both a need and a reason to change employer fairly soon in your career. Many times already after 1-3 years and especially so in the big cities.
Why you are getting tired of the big accounting firm
Some of the reasons why you as a customer, and many with you, are starting to get tired of the big accounting firms today are:
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They are forced to charge more than they create value for their clients. This is largely because private equity firms have entered the industry and paid billions for accounting firms.
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Large accounting firms take on so many employees with no long-term work experience that they increasingly become just a simple accounting firm. Clients are not getting important elements that should be part of a complete financial function.
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The financial pressures experienced by large accountancy firms today create high staff turnover and lead to frequent changes of contact persons at client companies.
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Once staff turnover occurs, the large accounting firms are so pressured by profitability and time requirements that they do not even have time to train and overlap the new employees to manage your customer assignment in a good way.
If we are to conclude with something that usually works very well when it comes to the big dragons, something we have noticed when we at Nya Ekonomikompetens have taken over customers from Aspia, EY and others, it is order and orderliness in the basic accounting. You have followed your checklists, the VAT accounting is correct and most of the balance sheet is normally under control. Something that is far from a matter of course when customers come from various smaller accounting firms.
However, more is required today, even from an external finance function, than ‘just’ handling accounting and VAT. As a customer/finance manager, you need to take the ball in creating better business conditions for the customer company. More and more customers of the large accounting firms are therefore choosing to switch to smaller finance providers instead. To get a functioning whole on the financial side and not ‘just’ accounting.
