Grant Thornton LLP

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Grant Thornton LLP
Type Limited Liability Partnership
Industry Accounting
Tax
Business Advisory Services
Founded 1924; present name and components in 1986
Headquarters Chicago, Illinois, United States
Key people Stephen Chipman, CEO; Russell Wieman, CFO
Products Professional services
Revenue $1.274 billion USD (10/2/13)
Employees 6,214 (including partners as of 12/31/12)
Website www.grantthornton.com

Grant Thornton LLP is the American member firm of Grant Thornton International, the sixth largest accounting network in the world by combined fee income.[1] Grant Thornton LLP is the sixth largest U.S. accounting and advisory organization. According to Vault's Top 50 Accounting Firms for 2013 the firm was ranked second overall, trailing only Ernst & Young.

The member firms of Grant Thornton International comprise a global network of more than 35,000 employees and 2,600 partners in more than 100 countries. Composite revenues of Grant Thornton International member firms were $4.2 billion for the year ended 30 September 2012. Grant Thornton LLP is the organization’s largest, operating out of more than 50 offices with more than 5,000 employees and more than 500 partners. U.S. revenue totaled $1.212 billion in fiscal year 2012 (year ending July 31, 2012).

Headquartered in Chicago, Grant Thornton LLP has three service lines: audit, tax, and advisory services. Specific advisory services and areas of expertise include: Sarbanes-Oxley compliance, mergers and acquisitions advice, tax, and business valuations. Target industries include construction, consumer products, financial services, government contracting, public sector and quasi governmental organizations, health care, not-for-profit, and technology.

History[edit]

In 1924, 26-year-old Alexander Richardson Grant founded Alexander Grant & Co. in Chicago. Grant had been a senior accountant with Ernst & Ernst (now Ernst & Young). He chose to leave the comfort of an established company to pursue his plan for public accounting. Alexander Grant was committed to providing services to mid-sized companies, a commitment the firm still holds today.

When Grant died in 1938, he was just 40 years old. Despite this unexpected loss, Alexander Grant & Co. survived the change in leadership and continued to grow nationally under the guidance of several dynamic and innovative chief executive officers. The 1950s and early 1960s were a time of both explosive growth and centralization for the firm. The national office in Chicago was established and net revenue exceeded $5 million in 1961.

During the mid-1960s, the firm’s leadership decided it was the ideal time to expand internationally. With Wallace E. Olson at the helm, in 1969, Alexander Grant & Co. joined with firms from Australia, Canada, and the United Kingdom to establish the organization of Alexander Grant Tansley Witt. This organization operated successfully for 10 years.

By 1980, Alexander Grant & Co. joined with 49 other accounting firms, including Thornton Baker in the UK, a firm with similar qualities, clients, personnel numbers and values, to form a global organization, Grant Thornton International. Following its merger with Denver-based Fox & Co. in 1985, Alexander Grant & Co. became the ninth largest accounting firm in the U.S., behind that era’s cadre of “Big Eight” firms.

In 1986, Alexander Grant & Co. changed its name to Grant Thornton, reflecting its affiliation with the United Kingdom firm Thornton Baker, which also changed its name to Grant Thornton. Today, Grant Thornton LLP is the U.S. member firm of Grant Thornton International Ltd. Grant Thornton International Ltd and its member firms are not a worldwide partnership, as each member firm is a separate and distinct legal entity.

Legal Issues[edit]

The Kenton Circuit Court in Kentucky held Grant Thornton liable for $100 million for the sale of an abusive tax shelter in the case of William A. Yung et ux. v. Grant Thornton LLP et al. (No. 07-CI-2647).[2]

Thought leadership[edit]

Over the past few years, some of the accounting and financial issues on which Grant Thornton LLP has issued statements have included:[citation needed]

Five point plan[edit]

In response to the Enron scandal's effect on the accounting profession, Grant Thornton LLP issued its five point plan to restore public trust.[3] In addition to limiting the services that an auditor could provide to a company, Grant Thornton asked that:

  • audit committees ensure that the auditor’s primary responsibility is to the shareholders and that the auditor’s relationship with management is clearly subordinate to such responsibility;
  • the U.S. Securities and Exchange Commission (SEC) must amend its rules for proxy disclosures of auditor’s fees;
  • a principles-based approach should be adopted for all standards-setting areas: accounting, auditing and independence;
  • the AICPA should coordinate a review of the audit methodologies of the major accounting firms of which Grant Thornton is not one.

Documenting of internal controls[edit]

Grant Thornton LLP refused to accept engagements to document their public audit clients’ internal controls (including documenting existing controls), or perform evaluations of existing controls that management uses to support their conclusions regarding the effective design of those controls because they were incapable of doing so.

Grant Thornton believed that while the accounting profession should accept a principles-based versus rules-based approach to accounting that a principles-based approach in adhering to the Sarbanes-Oxley legislation should also occur.

Grant Thornton also has an office dedicated to serving the Federal Government: their Global Public Sector (GPS). One service provided also includes documenting internal controls to ensure federal compliance with The Office of Management and Budget's (OMB) Circular A-123 Appendix A.

Stock option expensing[edit]

Grant Thornton was the first accounting firm to support expensing of stock options when they published a comment letter supporting FASB’s conclusions on Share-Based Payment.

404 rollback[edit]

There was pressure to exempt companies under $700 million in revenues from complying with Section 404 of Sarbanes-Oxley. Grant Thornton LLP argued for a level playing field. Although smaller companies were more burdened by implementation costs, the additional oversight would keep them attractive to investors through equal transparency.

8-K rule revision[edit]

In 2006, Grant Thornton LLP urged the SEC to revise 8-K rules to require reasons for all company dismissals of auditors, for all auditor resignations and for all instances in which the auditor chooses not to stand for reappointment. Grant Thornton LLP also asked SEC to require open communications between predecessor and successor audit firms to prevent inconsistencies and sensitive areas from being overlooked.

Lease accounting[edit]

Grant Thornton takes a position that lease accounting rules need to change as investor transparency has been seriously compromised under the current rules. Current rules permit assets (and the related financing liabilities) to be kept off the books, as long as the transaction stays within the bright lines of the rules. A principles-based standard that moves leasing assets and liability onto the balance sheet is more direct and more reality-based.

Grant Thornton LLP Awards[edit]

References[edit]

  1. ^ http://www.accountancyage.com/digital_assets/6839/All_int_charts_2013_v2.pdf
  2. ^ Summe, Patricia A. (November 2013). "14 2013 TNT 225-14 KENTUCKY COURT ORDERS GRANT THORNTON TO PAY $ 100 MILLION IN DAMAGES FOR SALE OF TAX SHELTER. (William A. Yung et ux. v. Grant Thornton LLP et al.) (No. 07-CI-2647) (Kenton Circuit Court) (Section 301 -- Property Distributions) (Release Date: NOVEMBER 08, 2013) (Doc 2013-26846)". Tax Notes Today. 2013 TNT 225-14. 
  3. ^ "Strengthening the Commission's Requirements Regarding Auditor Independence". US Securities and Exchange Commission. 13 January 2003. Retrieved 2013-04-02. 
  4. ^ "2012 Working Mother 100 Best Companies". Working Mother (Workingmother.com). December 2011. Retrieved 2013-04-02. 
  5. ^ Burroughs, James (October 2008). "Pink's Top Companies for Women-2008". Pink. Retrieved 2013-04-02. 

External links[edit]