‘We believe that we can double the size of our business again’
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EY managing partner Frank O’Keeffe has a pep in his step as he bounds into the fifth floor office of the accounting firm’s headquarters on Harcourt Street, and offers an elbow bump as a form of welcome.
The EY head office has been remodelled into a collaborative hybrid work space, with funky new furniture and freshly decorated walls. Some of the chairs still have their plastic on and the floor is empty, awaiting a return of EY’s staff whenever Covid-19 restrictions are finally lifted.
The pandemic hasn’t halted EY’s recent gallop though. We meet just before the Christmas break, with the year end being smack in the middle of EY’s financial reporting period.
In terms of calendar year 2021, O’Keeffe says the firm added 500 roles, to bring its headcount to about 3,700 to facilitate growth. This will increase to 4,200 by the middle of this year. He acknowledges how “hard it is for people to be virtual all of the time” but says there has been a great “sense of pride and teaming” within the firm that has enabled it to grow strongly during the past two years of restrictions.
According to O’Keeffe, about 35 per cent of EY Ireland’s staff were either “promoted or progressed” last year, which seems a huge number. Its diversity is reflected by the fact that there are 53 nationalities at the firm and his aim is to have 35 per cent female equity partners by 2023. “We want to be seen as the best professional services firm in Ireland, not just for clients but also by staff as well.”
Like many others, O’Keeffe thought the early months of last year would be tough but come March the “pandemic would subside a lot more”. That didn’t turn out to be the case, as the empty desks adjacent to where we are sitting attest.
Nonetheless, EY had a strong year – it posted fee income of €350 million for the year to the end of June 2021, net of clients expenses and disbursements. This was 11 per cent up on the previous year and O’Keeffe says its growth outpaced that of its Big Four rivals, Deloitte, KPMG and PwC. “We are significantly ahead of our plan and significantly ahead of last year,” he says of the full year 2022 performance, without revealing the fine plan. “That’s due to all of our service lines performing well and investments made in new areas of our business that are paying off early.”
These new initiatives include launching EY Law (which will focus on client legal issues around intellectual property, employment law, real estate and mergers and acquisitions), which is led by former Eversheds managing partner Alan Murphy. Its five-year strategy involves investing in the traditional areas of business – audit, consulting, tax and corporate finance – and new ones such as tech consulting, sustainability, Parthenon (its global strategy arm) and law. “We believe that we can double the size of our business again from where we were in 2020. Roughly we would be a €660 million business by 2025. That’s our plan for the island of Ireland.”
This will be driven by piggybacking on the growth of the Irish economy, taking market share off rivals in core areas, and growth in tech consulting, data analytics, cyber, law and strategy businesses, he says. “They are all new areas that will add value to our clients and hopefully generate the right return for us.”
Double digit growth
It’s an ambitious growth plan but O’Keeffe says EY is seeing double digit growth across most of its service lines and is “investing hugely” in its people, technology and innovation. “None of our plans are finger in the air. When Covid kicked in around March 2020 I had roughly 1,000 consultants, 1,000 auditors and 1,000 people in different other parts of the business and it was a moment when we had to think ‘how do we make sure we’re supporting our clients through this window?’
O’Keeffe says he asked half of the firm’s board to focus on ensuring that the day-to-day business remained strong during the pandemic and continued to focus on its clients, while the other half was asked to work with him on “discovery thinking”.
“That was all about who do we want to be by 2025 and and what sort of skillsets do we want in our organisation.”
This involved focus groups with staff and partners, and sessions with clients, from Government to public companies, overseas investors and private businesses, to design and hone its strategy for a post-pandemic digital age. “All of our businesses will have significant double digit growth,” he says.
O’Keeffe accepts that there is no certainty it will be able to deliver on the growth plan but this is the firm’s “ambition” and having that “purposeful vision. . . gives us a very good target” about “where we want to be by 2025”.
His Big Four rivals will no doubt have similar ambitions for growth. What sets EY apart from the competition?
O’Keeffe begins by declaring his “huge respect” for his Big Four rivals, who are “really good businesses” in a “hugely competitive marketplace” before stating that EY’s people and its culture are what make it different to the rest.
“How we team together and how we bring the best of our firm across service lines and also. . . because we are seen and known as the most integrated firm of the Big Four.”
That’s a nod to the fact that it is an all-Ireland business, and heavily integrated globally. “When we need to bring talent to Ireland to support our clients where there is no playbook for that sort of work, we can do it very seamlessly. We can also serve our clients that are headofficed here but who work all around the world.
“We are incredibly focused on innovation and technology and people development and client delivery. I know all of our competition are but I think the way we go about it, the relationships we build and the value we deliver set us apart and that’s why we have had market-leading growth.”
His rivals would probably say a similar thing but there you go.
When EY goes to tender for new business, does it get asked about Anglo Irish Bank, where it was the auditor before it’s collapse post the 2008 crash, with taxpayers having to provide €29 billion to bail it out. A probe by Chartered Accountants Ireland into EY’s role as Anglo’s auditor remains live.
Or is it asked about EY Germany’s audit of Wirecard, the payments company that filed for insolvency in 2020 after admitting that €1.9 billion of cash probably never existed. It was one of Europe’s biggest accounting frauds.
“No, I don’t really get asked about Wirecard or Anglo, which took place in the global financial crisis in 2008. I can’t really talk about Anglo right now because there are still cases there that we haven’t had the opportunity to share our views on or to go through the processes. Clients don’t go back to the global financial crisis in relation to the current services and offerings we deliver to them.
“Wirecard is quite an interesting one that doesn’t come up in the majority of client conversations. I think the market and buyers of our services, whether it’s audit or non-audit, they understand the sophistication of that fraud. There was a significant amount of individuals who set out to defraud that business. From an audit quality perspective. . . they have done a huge amount of work in EY Germany and work very closely with the regulator on the process that they’re going through at the moment.
“From a global perspective, we are number one focused on audit quality, on training and learning and making sure we deliver for the capital markets. We are investing nearly $1 billion in our assurance business to make sure that the capital markets and shareholders have the trust in audit and in EY.”
Of course, the other Big Four firms have had their share of high-profile client collapses over the years, both at home and abroad. EY is not unique in that regard.
“What clients are interested in is our regulators view of how we perform our audits and the quality of our audits on the island of Ireland,” O’Keeffe adds.
EY’s high-level Irish regulator is the Irish Auditing and Accounting Supervisory Authority (Iaasa), while the professional body, Chartered Accountants Ireland, has an oversight role, too.
O’Keeffe says it has been “noted” by Iaasa that it has produced “top end quality from an audit perspective”, and also cites a positive review from Chartered Accountants Ireland of its work for non public interest entity audits, the results of which are due this year.
Under the heading ethics and independence, Iaasa’s latest report on EY, dated March 15th, 2021, noted “one matter requiring improvement in the firm’s system of quality control”. It found that some of EY’s partners and professional staff failed to record all of their financial interests in the firm’s independence tracking system in a timely manner.
Iaasa added that none of the late recording of financial interests caused EY to be in breach of its external independence rules, but it’s not a good look for a professional services firm that prides itself on attention to detail and quality.
“Absolutely we take them on board,” he says of Iaasa’s findings. “We put them back into our training processes for all of our auditors in that season to make sure that we cover out on all of those things.
“We would have a robust process around any of our partners and how they look at the independence of their own financial investments, to make sure we comply in full and are not conflicted at all. We had no material findings, it was more around timing,” he says, adding that the firm’s 102 partners have been reminded of their obligations.
O’Keeffe hails from Raheny but both of his parents are from Cork. His mother’s family were involved in the Lee Press printing business in the city while his father was a draper and one of the first people hired by Arthur Ryan at Penneys in the late 1960s. “Penneys was in my family home. My dad and Arthur Ryan, Breege O’Donoghue and Seamus Halford really were the team that built out Penneys in Ireland and the UK,” he says.
His childhood involved some time spent in Aberdeen, where his dad had an assignment with Penneys, and school was spent in Marian College in Ballsbridge.
“We had a close family member who had his own accountancy practice and I kinda got the grá from there,” he says of his career choice.
He qualified as an accountant with ACCA and went to Australia with his now wife Susan, and worked as a personal assistant to the chief financial officer of a large company there, whose auditor was EY. At aged 24 he returned home and got a role with EY here, with a little help from his former colleagues down under.
He became an audit partner at aged 33, and later spent five years in charge of EY’s high profile and hugely successful annual Entrepreneur Of The Year programme, up to 2014. He was then head of assurance, taking on the role of managing partner in 2018. “It’s been fantastic,” he says of his time with the firm.
His term as manging partner is an “open mandate” with no set timeframe, unlike with most other accounting firms. His time in the job is a matter for himself and the firm’s leadership team and partners, he says.
“Once I deliver for the partners and our people and they want me to lead them, I’d be delighted to stay. I love EY and I think we’re an incredible business that’s going great places.”
Name Frank O’Keeffe
Job Managing partner EY
Family Married to Susan
Something we might expect: He is a member of ACCA, a professional body for accountants.
Something that might surprise “My first job was in the Arnotts record store. A neighbour of mine owned that store and I worked there for a summer or two from when I was 16. When I was nine, 10 or 11, my dad would put me in the back of the car and we’d go to Sligo or Killarney and we’d be on the floor of Penneys and then we’d be back in Mary Street [Dublin] for closing of the week’s tills on Saturday afternoon. They were great learnings. Penneys is always in my memory.”
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