Grant Thornton hit by client losses after Parmalat scandal

By Adrian Michaels in New York Grant Thornton is picking up fewer clients in the US this year than in the past, in an early indication that the accountancy firm's troubles at Parmalat and elsewhere could be hurting its reputation.
Data prepared for the Financial Times by Auditor-Trak, a service that logs changes of auditor among companies listed in the US, show Grant Thornton has
M ~ lost 19 clients this year and gained, three, a net loss of 16. In the comparable period last year its net loss was six, while it had a small net gain in 2002 and 2001.
The US is a crucial market for the middle-tier accountancy firm and any hints that business is suffering could affect Grant Thornton's fortunes. Some 25 per cent of the firm's 2003 global revenues of $1.84bn were made in the US.
Richard Ossoff, publisher of Strafford Publications, which
runs Auditor-Trak, cautioned that the numbers were small and related to a short time. But he said the loss of 19 clients "may indicate a trend because the absolute number of changes at auditors has slowed since the large turnover following the collapse of Andersen". AuditAnalytics, a rival tracking firm, said its numbers were similar - Grant Thornton had gained six clients and lost 18.
Grant Thornton is embroiled in the Parmalat scandal and has already expelled its Italian arm.
Separately, it emerged yesterday that Bank of America and several former executives are likely to be charged by Italian prosecutors with market rigging for its role in the finances of Parmalat, people familiar with the inquiry said. Grant Thornton's Italian business audited 19 Parmalat subsidiaries.
The small gains for Grant Thornton are striking because other firms have been winning
clients from Big Four rivals. Mr Ossoff said Ernst & Young and PwC, for example, had net losses of over 20 clients this year while BDO Seidman, one of Grant Thornton's nearest rivals, had gained 10 and lost none.
A recent survey showed the Big Four - the other two are KPMG and Deloitte Touche Tohmatsu - had been ceding business to smaller rivals.
Grant Thornton said yesterday it too was shedding risky clients, and its first quarter US growth was ahead of projections. The firm added that the Auditor-Trak data were incomplete. "[The figures do] not account for the addition of over 100 private clients, nor the 10 public clients we resigned as a result of our risk screening, and the seven public clients for which we raised questions on their accounting methods or ongoing concern issues and who then switched auditors."