BDO hands back £4.1m furlough cash after public backlashby
Accountancy firm BDO LLP has surrendered to the adverse publicity and agreed to return the £4.1m furlough payments back to the government.
BBO’s managing partner Paul Eagland said the firm had planned to review paying back the money at the end of their financial year in June 2021 but the “public mood requires a much quicker process”.
Therefore, Eagland confirmed that BDO has “accelerated” this decision and will be “returning the money before Christmas”.
BDO’s stance is an about-face from last week when the firm published its annual figures and highlighted the internal “moral debate” but at the time decided that there was a greater responsibility “to invest in jobs”.
In their financial results, BDO reported a fall in business profits by over £25m caused entirely due to the impact of Covid-19 in the final quarter. This trend was seen in the final three months of the year between April and June where revenues fell by 13% and profits by 50% compared to the prior year.
“COVID-19 has already had a huge impact on our business and we don’t know what lies around the corner,” said Eagland at the release of the results.
“This means we have had to take a number of tough but prudent decisions to ensure the sustainability of the firm and to protect our people’s jobs – not just for the initial lockdown period but also looking ahead to the slow, challenging recovery.”
To absorb the fall in profits BDO asked partners to reduce their average partner profit per partner ‘pay’ of 14% to £518,000 down from £602,000 last year. “Subsequently – and in order to protect the jobs and pay packets of our 5,500 UK people - we applied to use the Coronavirus Job Retention Scheme,” said Eagland.
BDO paid the furloughed employees in full by topping up their wages to 100%. All of the furloughed employees have been brought back into full-time employment with no redundancies.
BDO’s U-turn is an example of the adverse publicity that may come as a result of HMRC’s plans to release information about employers who use the Coronavirus Job Retention Scheme over December and January.
information about employers who submit claims under the extended Coronavirus Job Retention Scheme (CJRS) over December 2020 and January 2021.
With neither PwC or Deloitte using the furlough scheme, BDO’s decision has understandably prompted a lot of debate within the profession and on the Any Answers forum.
AccountingWEB reader Carnmores echoed the public criticism that “partners earning more than £400k are not in need of support”.
While NH suspected that BDO’s U-turn was a business decision rather than because they felt it was the right thing to do. “Does their business model rely that much on public opinion?”
However, others like AccountingWEB member Drookit_dug said “it's not for us to cast moral judgement on the level of profits they make”.
They explained, “All [BDO] needs to do is demonstrate that their operations have been severely affected by the Covid pandemic in order to access the scheme.
AccountingWEB regular Tom123 argued that BDO was not alone in taking furlough cash at the start of the pandemic. “After all, it was on offer, and who knew how things would turn out.”
But added, “Firms as large as BDO should perhaps have had the foresight to see where things may go public opinion wise, in my opinion.”