Grant Thornton Irish arm breaks ranks with UK firm over audit work
Irish arm will not follow UK firm’s move to stop bidding for audit work from big firms
Grant Thornton’s Irish office said audit work would remain a key part of its strategy to grow its business here.
Accountancy firm Grant Thornton’s Irish partnership will not follow its UK counterpart’s decision to stop bidding for audit work from big listed companies.
Grant Thornton in the UK has decided to stop pitching for audit contracts from Britain’s largest listed companies after concluding it is too difficult to compete with the Big Four firms that dominate the market.
However, Grant Thornton’s Irish office does not plan to follow suit and said on Thursday that audit work would remain a key part of its strategy to grow its business here.
Grant Thornton said its Irish audit group employs 350 people and continues to grow.
“We work as close business advisers to our clients, which range from traditional family firms to large-scale multinational businesses, many with complex and multi-jurisdictional audit and reporting requirements,” the firm said in a statement.
Grant Thornton added that it had ambitious plans to grow its Irish business with new and existing clients.
Grant Thornton, the UK’s fifth-largest accounting firm by revenues, will continue to audit the five FTSE 350 companies it works with but will stop participating in tenders for new audit business from other large listed groups.
Sacha Romanovitch, chief executive of Grant Thornton, said: “Structures in the [FTSE 350] market make it impossible for us to continue to succeed in it. If this space is dominated by four players and there does not seem to be market appetite to change, let’s focus on areas where we can [succeed]. You have to have that strategic clarity.”
‘Glorious second place’
Grant Thornton’s decision to stop bidding for FTSE 350 audits is partly a response to the cost of participating in tender processes when the firm routinely comes “a glorious second place”, Ms Romanovitch said. Each tender process costs the firm about £300,000, she added.
The firm also worried that its inability to challenge the Big Four for FTSE 350 contracts – which often came down to its lack of extensive experience in this area – was bad for the morale of staff attempting to win these contracts.
Grant Thornton will instead focus on markets where it is growing more rapidly, such as auditing public-sector organisations and smaller companies listed on the FTSE AIM index.
The firm said it had recently won a five-year contract to deliver more than 40 per cent of public-sector audit work, demonstrating it had “the capability to deliver quality audit at scale, and compete really effectively”, said Ms Romanovitch.
The lack of competition in the audit market was in the spotlight again earlier this month when the UK Financial Reporting Council, which oversees the market, said a break-up of the Big Four may be necessary.
Stephen Haddrill, chief executive of the FRC, said he had concerns about regulators’ failure to tackle the dominance of the Big Four. He added that the rapid growth in revenues for the four from consulting raised separate concerns about conflicts of interest in the market.– Copyright The Financial Times Limited 2018