KPMG's head offices at La Defense business and financial district in Courbevoie near Paris, France, on May 16, 2018.CHARLES PLATIAU/Reuters
Early fears of the impact of COVID-19 on the accounting profession have given way to full staffing and normal compensation at several firms as the industry hits its busy season.
In March and April, as the economy shut down and the scope of the pandemic was unknown, a number of firms scaled back partner pay and furloughed junior employees, similar to what was seen at many Bay Street law firms. But as 2020 came to a close, some accounting firms had comfort in staffing back up and restoring pay.
KPMG reduced its partner “draws” – compensation based on expected annual profits – in late March, said Canadian managing partner Jonathan Kallner. The firm restored the draws as its fiscal year closed at the end of September, “when we had a better understanding on how the pandemic would impact both the economy and our business.”
The number of employees at KPMG LLP has now increased slightly, year over year. The number of new hires was also consistent, he said, including honouring all 445 offers the firm had extended to 2020 graduates before the pandemic hit and keeping the 645 students in its paid summer internship and co-op programs.
And, Mr. Kallner said, the firm “continued on with our normal compensation arrangements,” including incentive pay. KPMG also provided employees a work-from-home allowance.
Ernst & Young LLP said in April that it had not reduced hours or employee compensation and told The Globe and Mail that it had “committed to no involuntary staff departures due to the pandemic at this time.”
Stephen Shea, the firm’s Canadian managing partner in charge of human resources, says E&Y was able to stick to that, cutting employees only as part of its annual performance reviews.
“We did that, but there were no formulaic or what you might call programmatic layoffs since COVID. ... What we said to our people at the time was that we were going to build their careers for the long term, and we were not going to take short-term measures.” Mr. Shea declined to address partner compensation.
“Certain of our clients that have had amazing years, and there’s others that are extremely struggling,” Mr. Shea said. “And when you have a firm that serves both ends of that spectrum through all facets of its service, it’s been a year that was month to month week to week –nobody knew what was coming in terms of the business stability. And you’d be a fool to say ‘I know exactly what’s going to come in the next six months.’ ”
What did help accounting firms’ profits, like those of law firms, is a fundamental change in the cost structure, with travel cancelled and meetings moving online. “When everybody’s at home and there’s no airplanes and there’s no restaurants, a lot of that cost is gone,” Mr. Shea said.
The major accounting firms employ tens of thousands of well-paid white-collar workers across Canada. Over time, they have expanded their practices to assist clients with tax matters, information technology problems and other business challenges. At many firms, the non-accounting consulting and advisory services employ many more than the traditional auditing practices.
It seemed in April that some of the firms’ big business lines such as tax and audit work would simply be delayed, and that proved to be true, as companies ultimately needed to file tax returns and financial statements for investors. While some consulting projects may have been delayed, other fresh needs arose from the pandemic.
Still, the picture is incomplete. Some firms that responded to questions from The Globe in April declined interviews for this article, including PricewaterhouseCoopers, which previously acknowledged introducing voluntary programs “to give our people greater flexibility,” and BDO Canada LLP, which reduced partner draws by 25 per cent. PwC declined to answer any of The Globe’s questions on COVID compensation and work practices, while BDO offered a brief statement about health compliance.
Grant Thornton LLP has not responded to requests for comment on its business since the beginning of the pandemic.
An accounting-industry blog called Going Concern, however, drew on anonymous tips and Reddit comments over the course of 2020 to suggest several firms made job cuts during the year, sometimes numbering in the hundreds. Going Concern said Deloitte LLP made cuts in May, July and October.
A common theme in the blog was that the firms’ annual performance-based terminations were driven more by economics than normal. Employment-law firm Samfiru Tumarkin LLP set up a dedicated page on its website to solicit PwC employees potentially seeking severance pay as clients. (The firm declined to tell The Globe whether it is currently representing any accounting-industry employees.)
Mr. Kallner of KPMG said it did some “normal course terminations” in March – the midpoint of its fiscal year – that “were 100 per cent performance related ... we would normally do [them] in any other year in early March, and that process was under way prior to the pandemic.”
Deloitte LLP told The Globe in April that it had reduced compensation for partners and others last spring. Deloitte spokeswoman Tonya Johnson, in a written response to questions about layoffs, said Deloitte Canada made “some staffing changes last fiscal year, as part of our normal, annual year-end process, based on business needs and forecasting for the new fiscal year.” Deloitte has “slowed down on hiring for replacements for attrition since the fall of 2020,” she said, but over all, staff and partner numbers have remained consistent since April at approximately 14,000, she said.
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