Grant Thornton reports 90% drop in audit profits

Accountancy firm Grant Thornton has reported a 90% drop in its audit profits after facing a difficult year where it was put under an investigation by the Financial Reporting Council (FRC).

Grant Thornton reports 90% drop in audit profits

Dave Dunckley, CEO, Grant Thornton UK

Grant Thornton made a £1 million profit from audits in the 18 months to January 2020, a decrease from £13m in the previous 12 months.

The firm changed its fiscal year from June to December and invested £7m in a plan to improve the quality of its audit processes last year.

Grant Thornton reported that its audit revenues were £201m for the 18 months to the end of 2019, compared with £140m the previous year. Total UK revenues of £728.4m were boosted by strong growth in the advisory business.

The firm’s pre-tax profit for the same period was £72.4m, against £479.5m of revenue and £67.6m pre-tax profit in the previous 12 months.

The average profit share per partner was £513,000 over the 18-month period. An interim report published in October showed that the average profit per equity partner for the year to June had fallen by £20,000 to £323,000.

Dave Dunckley, CEO of Grant Thornton UK, said: “Our return to growth by the end of last year shows that the efforts of everyone at Grant Thornton have created a more focused firm, better placed to serve our clients in the core markets we operate in.

“We ended the financial period in a much more robust position, with a clear strategy, focused on our strengths and priorities, which has continued into 2020.

“Clearly, the economic landscape has changed rapidly over recent weeks, but the hard work of our partners and our people during 2019 in implementing our strategy and structure have allowed us to make informed and proactive decisions to help our people and clients manage during this period.”

The FRC put Grant Thornton under investigation last year after labelling its performance as “unacceptable” because of its continuous poor results in an annual assessment of the UK’s audit firms, The Times reports.

Mr Dunckley added: “We will not shy away from the public scrutiny we, and all of our profession, face over historical matters that have led to diminished trust and questions over the quality of audits in particular.

“However, we have taken actions to deal with the underlying causes of previous issues in our business and have made provisions for legacy liabilities while still investing to grow across the firm.”

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