Grant Thornton shakes up top audit team for second time

Mid-tier firm Grant Thornton has changed its audit leadership team for the second time in a year with the appointment of Fiona Baldwin as head of audit, reporting directly to the CEO, reports Sara White

Baldwin will replace Jon Roberts, who spent under a year as head of audit assurance in 2018 and will return to his role as audit partner where his primary expertise is in public sector audit. Roberts shared the audit head role with Chris Smith, regional technical audit partner and head of the firm’s Financial Reporting Advisory Group (FRAG) in London.

The dual appointment approach lasted for less than a year and followed the transfer of then audit head Sue Almond, to the Grant Thornton international network as global head of assurance in mid-2018.

A Grant Thornton spokesperson confirmed that the head of audit role was previously split between two people – Roberts and Smith, adding that ‘as part of our plans to strengthen audit as a specialism at Grant Thornton, we are bringing these two roles together with a single, non-client focused remit across the audit function’.

Baldwin will also join the firm’s strategic leadership team and report directly to the firm’s CEO, David Dunckley.  The firm’s principal leadership and governance bodies are the strategic leadership team (SLT) which runs the firm as an executive function, and the partnership oversight board (POB), which provides oversight of the SLT on behalf of the partners.

The appointment follows a turbulent year at the firm with the fallout from the departure of Sacha Romanovitch as CEO last November after four years in the post, and the appointment of David Dunckley as CEO.

In its latest financial results, released December 2018, the mid-tier firm reported a 1.8% drop in profits as fee income took a hit due to continuing restructuring and hive-off of a failed IT infrastructure project. Fee income for 2018 dropped to £490.8m, down nearly £10m on 2017 where the firm had fallen below the £500m barrier with a shock 8% drop in profits [2016: £533.8m].

It has also been embroiled in a number of ongoing Financial Reporting Council (FRC) investigations into audits handled by the firm, including over the collapse of Patisserie Valerie. It also was handed a £21m damages bill in the High Court over breaches of professional standards over the audit of former client AssetCo while last year it faced a £4m fine for lack of independence over the audits of Nichols plc and the University of Salford.

Grant Thornton will now have to retrench and reorganise its audit business. In the last year it has taken a low key approach to listed audit, having made the decision to pull out of tendering for FTSE 350 audits due to high costs and lack of opportunity in early 2018. This March it picked up the Mothercare audit business, worth around £500,000 a year in fees.

It is also awaiting the government’s final decision on how to proceed with the Competition and Market Authority’s (CMA) recommendations on audit reform. This includes the possibility of joint audits, as well as the more radical step of breaking up the Big Four firms. Until a clear direction is set out by the government, Grant Thornton has indicated it will not reengage with the listed audit market, and will only work with that market sector for non-audit services. However, it does still have a number of FTSE 350 audit clients worth £3.2m in audit fees, including GVC in the FTSE 100.

The firm said that Baldwin’s ‘full-time leadership role will focus on driving quality at the core of the practice… overseeing investments to strengthen the firm’s capabilities’.

With over 20 years’ experience in audit, Baldwin was previously practice leader for the central region, overseeing Grant Thornton’s operations in Milton Keynes, St Albans and Leicester. She joined the firm in 2007 and qualified as ACA in 1995, and has led audit engagements across a broad range of industries, from publicly listed and larger corporates to social housing and pension schemes, both in the UK and internationally.

In a statement Dunckley said: ‘Fiona’s technical expertise in audit, coupled with her leadership skills and experience will bring an invaluable perspective to both our audit practice, and in helping inform the future direction of the firm. The appointment comes at a time where the industry is facing unprecedented levels of change.’

This will be the first time the audit head role will be a member of the firm’s top leadership team. Baldwin said: ‘I’m delighted to become the firm’s first head of audit to join the strategic leadership team, and look forward to ensuring that the changes that we are implementing in the firm and that are taking place across the industry result in the improvements in the quality of audit which our clients, the industry and wider stakeholders are calling for.’

Report by Sara White

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