Grant Thornton pulls out of bidding for FTSE 350 audits

Mid-tier firm Grant Thornton UK has made a strategic move away from tendering for statutory audit work in the FTSE 350, citing the difficulty of taking on the Big Four’s dominance in this area

In a statement, the firm said: ‘At Grant Thornton UK we do audit well and with scale. We are a market leader in public sector audit and one of the biggest auditors in AIM. We also work with a large number of FTSE 350 businesses on non-audit advisory work, so have credentials and experience working with large corporates across multiple sectors.

‘Despite this we only serve a small number of statutory audit clients in the FTSE 350 and it continues to be extremely difficult to penetrate this market in its current form.’ 

‘As a result we have taken the strategic decision to move away from tendering for statutory audit work in the FTSE 350, until we see a shift in the competitive landscape that would level the playing field for competing in this market. 

‘We will continue to serve our existing FTSE 350 clients and will focus on delivering and growing our non-audit services for this market, with our primary audit focus being in other growth segments.’

GT currently has five FTSE 350 clients: Interserve, Sports Direct, the Witan Investment Trust, the Woodford Patient Capital Trust and JD Wetherspoon.

Despite reforms to the system of audit tendering introduced by both the EU and UK, including the introduction of mandatory audit tendering after ten years, the Big Four share of FTSE 350 audits has gone up from 95% to 98% in the past five years.

Sacha Romanovitch, Grant Thornton chief executive, told the Financial Times that the ‘space is dominated by four players and there does not seem to be market appetite to change’.

She indicated the firm’s decision to stop bidding for FTSE 350 audits was based partly on cost, with each tender costing around £300,000 and routinely resulting in ‘a glorious second place’.

Grant Thornton’s announcement comes as criticism of the Big Four’s dominant position continues to grow. Their role in audit and consultancy came under attack from MPs at the recent select committee hearing into the collapse of Carillion, while the Financial Reporting Council has suggested it may be necessary to revisit the Competition and Markets Authority decision on widening competition in the audit market, which was made five years ago. 

Report by Pat Sweet

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