Deloitte posts $150m revenue slump in what has been a ‘complex and challenging’ year

Audit and consulting giant ­Deloitte Australia says it plans to increase its operations on expectations of an economic recovery in the second half of the year.

Deloitte Australia chief executive Adam Powick. Picture: Martin Ollman

Audit and consulting giant ­Deloitte Australia says it will buy more businesses and increase its operations on expectations of an economic recovery in the second half of the year, as the firm ­unveiled a 2.4 per cent slide in ­revenues.

In a $150m slump, driven by a downturn in consulting revenues, Deloitte chief executive Adam Powick said the business saw bright spots from its tech and audit operations, including divisions that prospered during troubled economic conditions.

Deloitte’s consulting practice suffered the worst of the firm’s revenue declines, down 4 per cent for the year, while the audit and ­assurance business recorded a 3 per cent decline.

However, the financial and advisory business saw only 1 per cent slides in revenues for the period.

Mr Powick said the firm had faced a tough year thanks to a pullback on consultancy spending by governments and business, coupled with intense pressure from a string of parliamentary inquiries into the sector.

“It’s been a very complex and challenging year in the profession as a result of the fallout of the PwC tax confidentiality issue,” he said.

“It has impacted the whole profession and occupied a lot of our time as leaders to make sure we were responding appropriately to the inquiries and Treasury review.”

But Mr Powick said the “direction of travel overall is pretty thoughtful and reasonable with an appropriate focus on strengthening the consistency of regulation, and improving govern­ance, transparency and the man­agement of conflicts of interests”.

“We are participating actively and willingly in these processes and we are also taking proactive steps to strengthen wherever we can our governance, transparency and systems of quality and conflict management,” he said.

In a recent parliamentary inquiry, the Greens called for accounting firm partnerships to be capped at 100 partners, while a Treasury inquiry is examining the current 1000-partner ceilings.

But Mr Powick pushed back strongly on the suggestion, with Deloitte boasting more than 1021 total partners split between 523 equity partners and 498 non-­equity partners.

“We don’t believe it’s appropriate for the Australian government to limit the size of any organisation and its ability to grow, invest and employ Australian workers,” he said.

The intense scrutiny of the sector and mooted reforms come after PwC Australia, the biggest firm in the sector, was involved in a scandal surrounding confidentiality breaches by its tax practice.

Mr Powick said the PwC scandal had shown Deloitte the value of “ensuring we have strong and robust governance and the importance of being able to raise and resolve issues”.

“This whole situation has highlighted that we can never take our brand and reputation for granted and we need to always ensure that what we do is in the best interests of our clients and also the long-term sustainability of the firm,” he said.

Mr Powick said that, despite the revenue slump in 2023, Deloitte was planning to grow in the year ahead with several acquisitions working through the firm, including the recent move to snap up a stake in PwC’s former indigenous consulting business.

This comes after Deloitte launched a global restructure in March, with headcount at the firm dwindling from 13,758 in 2023 to 13,077 in 2024.

Mr Powick said Deloitte was keen to continue investing in audit and tax as well as growing its AI, cyber, climate reporting, and cloud and engineering operations. But he said the assumptions that Australia’s economy would bounce back should not be taken “for granted”.

“We need to have the right settings in place to encourage business investment and drive business productivity,” he said.

Mr Powick said the government should also support the technology sector, defence spend, and the energy transition. “We should be tackling this proactively through collaboration between government and the private sector, and not just wanting and waiting for it to happen,” he said.