Too Many Accountants in U.K.? Labour Audit Reviewer Says Yes

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By Michael Kapoor

The domination of accountants in U.K. business is hindering growth in the wider economy, according to the man leading the opposition Labour Party’s review of the audit market.

“We have the most accountants per head of any country in the world,” Prem Sikka, the Sheffield University accounting professor heading up the Labour Party audit review, told Bloomberg Tax.

The accounting mentality dominance places undue emphasis on short-term results and restricts corporate investment, lowering innovation, productivity, and output, Sikka said.

As a proportion of the population, Sikka said the U.K. has more accountants than the rest of the European Union combined. “What good does that do the country?”

“This rush of graduates into accounting robs other sectors of talent,” Sikka said. That has resulted in an unhealthy domination of big business by accountants, with about 20 percent of CEOs of Financial Times Stock Exchange 100 Index companies qualified in accounting, he said.

The audit report was originally due in September. Completion by the end of the year is “reasonable,” Sikka said.


“The accounting mentality encourages short-termism,” Sikka said. “It does not encourage expenditure on research and development or investment, as those things reduce profits.”

Sikka said the U.K. spent less on research and development than other EU countries and had lower productivity stretching back to the 2008 financial crisis. “Labor productivity is more than a quarter below Germany’s,” he said.

A U.K. Office for Government Statistics report shows that U.K. productivity in 2016, the latest year for which statistics are available, was also below that of France, Italy, and the U.S., but ahead of that in Canada and Japan.

Sikka also pointed to very high levels of dividend payments to suggest that U.K. company managers were concentrating on boosting short-term results and payments to shareholders.

“U.K. companies are paying out the highest proportion of their earnings as dividends of any developed country,” Sikka said. “According to the Bank of England, British companies paid out about 10 pounds out of each 100 pounds of profits in dividends in 1970. By 2015, the amount was between 60 pounds and 70 pounds.”

Finance Over Sales

The 2008 worldwide financial crisis contributed to the emphasis on accounting and finance in the U.K.

Adrian O’Connor, CEO of recruitment company Global Accounting Network, told Bloomberg Tax by email that there has been a shift in recent years away from company bosses with a background in sales and marketing, and toward people who understand finance.

About 51 percent of the CEOs of FTSE 100 companies now have a finance background, and 18 percent of those are qualified accountants, O’Connor said.

“With U.K. firms coming out of the back of a recession, it stands to reason that boards and shareholders are increasingly realising the value of strong financial expertise at the highest levels,” O’Connor said. “With this in mind, the fact that accountants are disproportionately represented at the top of FTSE 100 firms is unsurprising.”

Broad Recruitment

The scale of accounting in the U.K. reflects a broad recruitment policy, Sharron Gunn, executive director for members and for commercial and shared services at the Institute of Chartered Accountants in England and Wales (ICAEW), told Bloomberg Tax.

“We’re very unusual in that you don’t need an accounting degree to enter the profession, in contrast to many other countries like the U.S.,” Gunn said.

As a result, she said, a broad variety of people enter the accounting field, with many seeing it as a general business qualification. “They go on to a wide variety of roles, whereas in many other countries accountancy is seen as a narrow auditing qualification,” Gunn said.

“That is reflected in the high number of accountants in business,” Gunn said. “In the U.S., I think it is more common for lawyers than accountants to become CEOs, but in the U.K., accountants do many of the roles done by lawyers in America.”

Still Increasing

The number of accountants in the U.K. increased by 9.9 percent to 360,000 from 2013 to 2017, according to a July report by the Financial Reporting Council, an accounting regulator.

Labour’s Shadow Chancellor John McDonnell commissioned an independent review of auditing and accounting chaired by Sikka in May, after a parliamentary report was critical of auditing standards at the collapsed outsourcing group Carillion plc.

To contact the reporter on this story: Michael Kapoor in London at

To contact the editor responsible for this story: S. Ali Sartipzadeh at

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