Blue-chips slow to ditch top accountants despite reforms

 

Click to follow

FTSE 100 companies are waiting to see “who will jump first” in hiring an auditor outside the Big Four that dominate accounting, according to the chief executive of their nearest rival, Grant Thornton.

Scott Barnes told The Independent that Grant Thornton has been invited to pitch for FTSE 100 work in the wake of reforms by the competition regulator to break the stranglehold of KPMG, PricewaterhouseCoopers, Deloitte and EY. But he thinks it is “going to be a long haul” to change the culture of blue-chip firms only using a Big Four outfit.

Even without cracking the FTSE 100, Grant Thornton has announced strong full-year results, with revenue up 9 per cent to £512m for the 12 months to June. Profit per partner was up 10 per cent to £385,000, with wins in public sector audit work and an advisory practice that grew 15 per cent.

Last year, an inquiry by the Competition Commission (now the Competition and Markets Authority) concluded that FTSE 350 firms should be subject to mandatory retendering of audit work every 10 years to provide more opportunities for smaller accountants. Its chairman, Laura Carstensen, was shocked that more than 90 per cent of the FTSE 350 was audited by the Big Four between 2002-10.

Mr Barnes said that the inquiry had encouraged listed firms into retendering work. Grant Thornton has been invited to pitch on about 15 audit roles for FTSE 350 firms over the past 12 months, and submitted tenders on about half of these. Most eye-catchingly, Grant Thornton replaced Deloitte as bean-counter to Interserve, the FTSE 250 construction group.

“Some of them were in the FTSE 100,” he said. “There has definitely been a change of attitude. But a lot of the tendering in the FTSE 100 has seen the roles exchanged between the Big Four – I think that will take a while to change, a bit like who will jump first?”

Earlier this year, PwC forecast that there would be 56 FTSE 350 retenders this year, compared to 30 in the previous 12 months, and just 18 in 2012. Mr Barnes, though, does not believe this structural change will eventually result in the Big Four growing into a Big Five or Six.

Comments