Rather than getting bogged down in the downfall of RBS, Sproul, a tax accountant by trade who joined Deloitte when it took over Arthur Andersen in 2002, tries to move the agenda on.
“An audit is a review of financial statements. It isn’t an assessment of the business model. But there’s a question as to whether the audits of the future should have that within them. I do think that is where regulators and the profession are going – asking what should it deliver for the future?”
As part of this, Deloitte used its recent audit of Vodafone’s annual accounts to trial a far more detailed version of the audit report it places within the annual report. “We felt – and Vodafone agreed – that we should give much bigger disclosure around the audit.
“It’s not yet perfect but it does start to explain what an audit’s about, explaining the scope, explaining what we actually look at when we audit something, how we measure materiality. Part of it is being prepared to be more open as auditors. If you’re standing outside the profession, you can see how it looks a bit like a black box and people don’t understand it.”
Deloitte, says Sproul, wants to be at the forefront of the debate of the value of auditing to the wider economy, and sees this as the first step.
But that is not to say he wears rose-tinted glasses with regard to some of the challenges the industry faces. Front and centre is the Competition Commission’s recent recommendation for mandatory audit rotation for large companies every five years.
“I think most companies will say not just that it’s not necessary, but that the sheer disruption and pain of doing it properly is just madness.” Deloitte’s submission to the Commission explains those views, ahead of final recommendations expected in late September.
Instead, Sproul points to the relatively recent requirement by the Financial Reporting Council for large corporates to rotate audit firms every 10 years, “which is starting to have an impact.”
He cites HSBC, Land Securities and RSA Group as FTSE 100 companies that have recently repitched their auditing requirements – HSBC moved from KPMG to PwC after 22 years – and says at least three other FTSE 100 tenders are in process.
“We don’t see that five-year tendering adds anything to the competitive landscape, and we think it runs the risk of detracting from quality.”
If every five years large global companies bring in a new audit firm, there must be a risk that something is missed in that change, says Sproul.
He seems more relaxed about attempts by the European financial services commissioner, Michel Barnier, to bring in regulation at a continental level in this area, however.
“He’s still out there,” Sproul smiles, questioning whether Barnier’s mandatory rotation rules will ever actually be implemented.
One area the 53-year-old is less relaxed about, however, is the recent ruling by the FRC on Deloitte’s corporate finance work on MG Rover.
The accountancy regulator’s tribunal found at the end of July that Deloitte had shown a “deliberate disregard” for professional ethics in its handling of the sale of the defunct carmaker. The firm now faces a £20m fine, though the tribunal is still considering the penalty.
“When you look at what was said, we really felt it was wrong, and it isn’t the firm that we are,” he explains.
“There are some elements, when you look at the [MG Rover] deal, where some procedures were not as strong as they are now. But the core issue is the one we’re most concerned about. There was no challenge [by the FRC] about the quality of advice, but rather that the advice we gave didn’t have as its prime objective the broader public interest.
“That’s the thing that concerns us. We think our advice was to secure MG Rover, which was in the public interest.
“We think it creates a lack of clarity on how you give advice – and we couldn’t let it just rest, as the accusation is something that is not our firm, it’s not the values we have.
“But let’s see where we get to on the sanctions,” says Sproul. Although a clear hit to its reputation, even a £20m FRC fine would be a mere chink in Deloitte’s strong financial armour.
Full-year results to be published on Monday for the near 1,000-member partnership show revenues rose by 8.5pc to £2.5bn in the year to the end of May. Profit distributable to partners stood at £571m, equivalent to £772,000 per partner against £789,000 in the prior year.
“They’d rather it didn’t go down,” he says, when asked how his fellow partners took the news. “But we’ve invested in 3,000 new people, made up 70 new partners, and I think the vast majority would say we need to invest for the long term.” Since being elected to the role in late 2010 – for a four-year term which began in June 2011 – he has refocused what the firm stands for.
Rather than wanting to be biggest, he has based his tenure on wanting to make Deloitte stand out in terms of client success and reputation, and making it feel like a real partnership.
Gone is the executive office on the tenth floor of Deloitte’s headquarters north of Fleet Street, gone too are the chauffeur-driven cars. In have come dinners between him and partners to discuss what the firm should be doing, and a state-of-the-art innovation centre to bring clients and staff together.
The stand-out performance in the recent financial year came from Deloitte’s consulting arm, with revenues up 14pc to £596m, driven by its investment and focus on digital innovation and the need to meet clients increasing technology-focused needs.
Part of this has seen the firm commit £10m of its own money to invest in the innovations of its own clients.
“When I’m talking to CEOs, three phrases come up every time: digital, cyber and data analytics. We recognised that two years ago and it’s one of the reasons we’re being successful.”
That success is something Sproul, who took home £2.7m, hopes to build on as he enters the second half of his senior partnership, and the inevitable re-election campaign at the end of 2014. “I can stand again, and I want to stand again. Right now, it’s the best job in the world. Of course, it’s hard, when you mention things like MG Rover, and no one likes any of that pressure, but it is the most extraordinary job.”
Name David Sproul
Current job Senior partner and chief executive, Deloitte UK
Past job Managing director for tax, Deloitte EMEA
Hobbies Cycling, motor racing, travel
Summer reads Thinking, Fast and Slow, by Daniel Kahneman; The New Digital Age, by Eric Schmidt; The Fry Chronicles, an autobiography, by Stephen Fry