Top 5 firm Grant Thornton has decided to no longer bid for audits of FTSE 350 companies after repeatedly coming second to the Big Four.
Despite working with several FTSE 350 companies in a non-audit capacity, the firm said that it is “extremely difficult to penetrate” the audit market in its current form.
The firm has tendered for several FTSE 350 audits but only won two since mandatory 10 year audit rotation came into force in June 2016, with the vast majority of FTSE 350 audits distributed among Big Four firms.
As an audit pitch can reportedly cost up to £300,000, the firm has taken the “strategic decision” to move away from tendering for FTSE 350 audit work until there is a “shift in the competitive landscape that would level the playing field”.
Sue Almond, head of audit, Grant Thornton UK said: “We are one of the largest auditors in the AiM market, demonstrating our ability to undertake audit work for diverse, fast-growing listed organisations. We are also a market leader in public sector audit, showing our capabilities in undertaking complex audit work at scale.”
Despite the firm’s audit experience and track record of delivering quality audits, Almond said: “We have been unable to impact the dominance of the Big 4 firms.”
“There will be some audits where we don’t have the right expertise or capacity, but – overall – the barriers we’re facing to winning in this market are not down to capability but are a result of systemic failings of the market.”
Grant Thornton’s decision comes amid a burgeoning conversation about the Big Four’s market monopoly and calls for them to be broken up.
Following the joint select committee hearings on Carillion, MP Frank Field questioned the sustainability of the “Big Four oligopoly”.
Other political and industry figures, such as Liberal Democrat leader Vince Cable and the Financial Reporting Council’s chief executive Stephen Haddrill have echoed this sentiment.
Haddrill last month urged the Competition and Markets Authority (CMA) to consider an inquiry into dismantling the Big Four firms into separate arms to encourage competition.
Grant Thornton will continue to serve its existing six FTSE 350 clients and focus on growing non-audit services for that market.
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