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Bruce Cartwright of ICAS discusses the need for audit quality to remain unaffected by private equity’s growing influence in the profession, as well as the value of identifying models different from the traditional partnership approach.

As private equity’s presence in the accounting profession continues to grow, so too do the concerns of those who aren’t sure about the implications – be it good or bad.

On the back of that rising influence, the Institute of Chartered Accountants of Scotland (ICAS) is calling for a multi-stakeholder review of the framework governing who can own audit firms.

The organisation’s private equity working group has launched a new paper looking at the impact on the longstanding rules that oversee audit firm ownership.

The document analyses both the risks and opportunities of private equity investment, while also highlighting that the aforementioned rules have not been revisited in depth for several years.

Among the opportunities are succession planning, capital investment which may enhance audit quality, growth with economies of scale, and successful partnerships between firms and investors. The risks include audit quality, ethical challenges, market impact, culture and what happens next?

Asking the right questions

Bruce Cartwright, chief executive of ICAS, has spoken to AccountingWEB about audit quality needing to remain unaffected by private equity, why trust must remain earned, the value of identifying models different from the traditional partnership approach, and what’s making it a “really interesting time” for the profession.

He believes the private equity models seen so far are “quite diverse”, as are the approaches. Such variety was mirrored in the early approach of ICAS’s new paper. “What do we do with private equity, good or bad? How does it fit in?” said Cartwright.

“Actually, what I think it quickly moves to is – that’s not the right question.

“Everybody has been focused on private equity. It’s come in different formats and different jurisdictions, and it doesn’t respect geographies. The real question is a structural question, of which private equity funding is a subset.”

He stressed: “I don’t think we’re going as far as saying the structure is not fit for purpose. We haven’t concluded on that but have undoubtedly concluded that it’s been a long time since anyone’s really considered the structure.

“I think that’s the key for me – there’s more work to be done around what’s the appropriate structure and what does ownership look like?”

Appropriate time to look

Cartwright’s view on the matter is that it’s about time those structures were looked at.

“Dare I say – if you really want to be brutal about it – it’s maybe only 100+ years but when Mr Price and Mr Waterhouse were here, they didn’t set up to have global entities and franchises.”

He recognised that there has been a “massive change in the ownership structures and controls”, albeit with “probably not the same degree of open and transparent conversation about what is the best way”.

“The accountancy profession has to act in the public interest but part of that public interest is to have thriving accountancy practices that are resilient and strong going forward.”

Cartwright added: “It just feels like an appropriate time to look wider and actually say, ‘Well, how do we facilitate that and what does it look like?’ because, as we all know, the pace of change is just huge.

“I think it’s just a really interesting time. I don’t think ICAS is saying we have the answer but we are saying we’re approaching the question from the wrong angle.”

The need to retain quality

The report noted that firms must be satisfied that private equity investment will not negatively impact quality or lead to ethical challenges “which cannot be managed”.

It’s obvious where the focus of ICAS’ publication lies, with the word “quality” appearing 20 times across its nine pages.

Cartwright said the topic has “been at the forefront of an awful lot of discussions in the past five to 10 years”.

“I’ve been CEO now for seven years and I can visibly see that audit quality has been a real focus, and I think it has been enhanced in the UK and across the globe.

“Rightly or wrongly, there could be conceptions about how private equity operates and what they believe in. Audit quality is not that different from other business models in the sense that a quality product reputation sells in the marketplace and is good for business.

“So why would it be any different for an audit firm or an accountancy practice than an engineering firm or something different?”

Within that context, Cartwright thinks there is a misconception that “private equity is driven by the need for profit margin and business models to give a payback”. He added: “There’s nothing wrong with that per se, because at the end of the day, to my mind, that ties in with audit quality.

“Audit quality is a long-term thing and so is the reputation of a business that could be destroyed overnight. So I don’t think they’re misaligned. I think there might be a misunderstanding.”

Reversing into it

The report recognises that the rules on ownership of audit firms “have not been revisited in-depth for a number of years”.

“Given the evolution of society and market conditions in which such firms operate, now would seem an opportune time to reassess whether these rules are still fit for purpose,” it added.

“They cannot be lightly disregarded but must be subject to objective, independent scrutiny to ensure that they still best serve the public interest.”

The document stresses that such a review “must be undertaken by a wider group of stakeholders than just the firms themselves”.

Cartwright was not sure he could define who he would like to see involved in that conversation, instead recognising that there would need to be “some debate about who those stakeholders are”.

“Obviously, regulators have a big say in this,” he added. “I think the regulators themselves would come up with criteria that we’re trying to meet. What criteria is it? Audit quality being one of them and then the structure you’re proposing – how does it meet the quality and the other criteria that we’re setting?

“You always have to understand what good looks like, and then reverse into it. That doesn’t mean that you have to have a one-structure-fits-all if it achieves the objectives.”

Writes AccountingWeb

Mental health, AI readiness and sustainability also rank high among UK finance professionals in ACCA’s latest Global Talent Trends survey

Nearly two-thirds of Gen Z accountants in the UK say they want to become their own boss, according to new research from the Association of Chartered Certified Accountants (ACCA).

The figure — 61% — is nearly double the average across all other UK age groups surveyed (31%) and higher than the global average of 52%, suggesting a generational shift in long-term career ambition among UK-based early-career professionals.

The findings are part of the 2025 edition of ACCA’s Global Talent Trends report, based on responses from over 1,300 UK finance professionals and more than 10,000 globally.

“It’s an exciting time to be a young accountant in the industry, with so many aiming for the goal of being an entrepreneur,” said Jamie Lyon FCCA, Global Head of Skills, Sectors, Technology at ACCA.
“With almost three quarters also keen and confident to learn new AI skills, and more employers looking to prioritise mental health and wellbeing, our survey data shows a profession that is striving to do better for everyone.”

Skills gap in AI training

Despite widespread confidence in learning artificial intelligence tools — with 71% saying they feel ready to upskill — just 23% of respondents said their organisation currently offers AI-related training. Nearly half (46%) of UK accountants believe AI will be the most valuable skill in the future of work.

While 30% reported concerns over AI’s impact on their roles, this figure has dropped significantly — down 12% from the previous year — suggesting growing familiarity with the technology.

Mental health under pressure

Work-related stress remains a major concern in the profession. 50% of UK respondents said their mental health has been negatively affected by work pressures, and 30% have considered resigning as a result. At the same time, 57% believe their employer is now treating mental health as a priority.

“Our survey demonstrates that the UK offers some of the best working conditions for the profession,” said Glenn Collins, Head of Technical and Strategic Engagement at ACCA UK.
“Such as majority hybrid working arrangements, high pay satisfaction, and good learning and development opportunities — all of which are crucial to developing those entrepreneurship skills.”

Broader themes: pay satisfaction and hybrid work

UK accountants also reported relatively high levels of pay satisfaction. 55% said they were happy with their current remuneration — significantly higher than the global average of 41%.

Meanwhile, 64% of respondents said they work in a hybrid model, while 16% are fully remote.

Environmental impact also featured as a career motivator, with 51% saying they want to pursue sustainability-related roles within accountancy and finance. Among those with side jobs, 41% said their secondary work was driven by a desire to “give something back” or pursue work with greater meaning.

Writes Accountancy Age

Accountancy firm MHA is bucking the trend of professional services opting for private equity investment as its £271m initial public offering (IPO) went live this morning.

The UK arm of Baker Tilly International launched onto London’s junior stock market, AIM, at 8 am.

The firm had a successful year in 2024, as MHA reported that its revenue jumped by nearly 30 per cent to £180m. Over the last four years, it doubled its turnover from £90m (2020) to £180m (2024).

MHA stated it has “a medium-term aspiration to become a top 10 UK accounting and professional services business, generating over £500m annualised revenue.”

To hit this target, the firm opted for external investment.

However, its move to list in the UK differs from the strategy being followed at other parts of the global firm.

UK taking a different approach

At the start of this year, private equity firm Inflexion agreed to acquire a minority stake in Baker Tilly Netherlands. The private equity house said at the time that its share would support the firm’s “growth plans in the region.”

In February 2024, Baker Tilly’s US arm announced an investment from private equity firms Hellman & Friedman and Valeas Capital Partners. The vision behind this investment was to fund its certified public accountant business.

So why did the UK arm opt for public investment? Rakesh Shaunak, managing partner and group chairman of MHA, told City AM it was a “unanimous decision” and “endorsed by the partners.”

The IPO was deemed “the most attractive, sustainable route for the long-term benefit of our people and clients.”

He explained that “for the right firm and the right investor, private equity is a valid option, but for MHA, the higher potential short-term gains from private equity were outweighed by the important distinction that the control of our strategic destiny and planning will very much remain in the hands of our Board and our partners.”

“We will pursue strategic mergers and acquisitions at our own pace,” he added.

Shaunak noted that “going down the IPO route [it] will also give our people a real stake in the future of our business via a significant employee benefit trust.”

“And crucially, it would allow us to offer equity participation to future partners and leaders, ensuring they have a direct stake in the firm’s continued growth,” he added.

Private equity surge in the market

Dan Coatsworth, investment analyst at AJ Bell, told City AM, “The alternative routes to an IPO include selling to a private equity company, yet there needs to be a willing buyer.”

“The accountancy and business advisory sector is certainly on private equity’s radar, but it might be that MHA is not the only potential opportunity around, and there are cheaper or more attractive targets to pursue,” he stated.

Maria Ward-Brennan writes for City AM

Ernst & Young (EY) is set to implement one of its most substantial partner redundancy initiatives in decades, aiming to safeguard profitability amid a sustained downturn in professional services demand.

The firm plans to eliminate approximately 30 partner positions, predominantly within its consulting division, according to individuals familiar with the matter.

Anna Anthony, EY’s managing partner for the UK and Ireland, communicated this strategy to partners earlier this month, though specific figures were not disclosed. ​

EY, employing around 20,000 individuals across the UK, offers a spectrum of services, including auditing major corporations, advising on corporate transactions, business restructuring, and tax consultancy.

Similar to its Big Four counterparts—PwC, KPMG, and Deloitte—EY operates under a partnership model. Its 894 equity partners jointly own and manage the firm, sharing annual profits, while 757 non-equity partners do not participate in profit-sharing. ​

The anticipated redundancies are primarily attributed to a decline in demand for consulting services. During the pandemic, companies heavily invested in consultancy to navigate challenges such as remote work transitions and supply chain disruptions, leading to significant sector growth.

However, rising inflation and interest rates have prompted clients to reduce expenditures on corporate advisory services, resulting in decreased workloads and subsequent job cuts across the Big Four firms. ​

In October, EY reported a 5% decline in average partner profits, reducing the figure to £723,000 for the fiscal year ending in June. Consulting revenues experienced a 4% decrease, while overall revenues saw a modest 3% growth.

To maintain profit margins for remaining partners, the firm has been adjusting its partnership structure, including reducing hiring as senior partners retire and, in some cases, transitioning equity partners to non-equity roles.

Notably, EY’s partnership decreased by approximately 50 members last year, and PwC saw 123 partners depart in 2024, partly due to early retirement initiatives. ​

This planned reduction of 30 partners represents one of the most significant single cuts to EY’s senior ranks in recent history. Such measures underscore the challenges faced by major professional services firms as they adapt to evolving market conditions and client needs. ​

An EY spokesperson stated, “We continually assess the needs of our business and make adjustments when required,” reflecting the firm’s ongoing efforts to align its operations with current market realities.

The broader consulting industry is experiencing similar trends, with firms recalibrating their workforce strategies to balance profitability and service delivery in a fluctuating economic environment

Writes Accountancy Age