THE chief executive of Grant Thornton in the UK has warned the FTSE 100 audit market is not yet “attractive” to accountancy firms outside the Big Four in spite of wide ranging moves to make it more competitive.

Sacha Romanovitch outlined that Grant Thornton, which has 4,500 staff in the UK and more than 40,000 around the world, has still to see any really compelling financial reasons to try to challenge the hegemony of PwC, Ernst & Young, KPMG and Deloitte in the audit space.

She said: “For us it is being really sensible about where we can play commercially and also where the market is ready for us to be.

“If you look at the FTSE100 there have been lots of different tenders but really they are just circling within the Big Four.”

In 2013 the Competition Commission proposed making FTSE 350 companies put audit contracts out to tender at least every 10 years.

The view was that would help to open up the market to competition and allow more accountancy firms a greater chance of winning audit work.

However the Competition and Markets Authority postponed the formal implementation of the measures as a similar European Union directive is also due to come into place.

That seeks to impose a 10-year maximum for new audit contracts as well as suggesting accountancy firms that have provided audit services for 20 years would not be allowed to compete in tenders with the same business.

Along with that there are proposals to make sure firms do not provide services such as tax and consultancy to any companies which it has audit contracts with.

The reforms, which also cover banks, building societies and insurers not listed on the stock exchange, are slated to take effect from June.

The role of auditors has been under greater scrutiny since the financial crisis where banks which later needed bailing out were given a clean bill of health by accountants signing off their accounts.

In the past 18 months several FTSE 100 firms have already changed auditors and run tenders with a view to making those moves prior to any new regulation being approved.

Firms which have already ended or signalled the intention to end long-term audit relationships include Aggreko, Barclays, Diageo, Marks & Spencer, Vodafone, Royal Bank of Scotland and Shell.

Ms Romanovitch, who formally became chief executive of Grant Thornton in the UK last year, warned the cost of preparing a tender for a big stock market listed business can be prohibitive as it will typically be between £350,000 and £500,000.

Therefore Grant Thornton has been careful about which audit clients it has pursued. It currently does the audit for Mike Ashley’s Sports Direct International with BDO the only other mid-tier firm to have a FTSE 100 audit client with Randgold Resources.

It is a similar story in the wider FTSE 350 with the Big Four still dominant although BDO and Grant Thornton both have a wide range of audit clients listed on the Alternative Investment Market.

Ms Romanovitch said: “We are focused on the ones where we think we can provide something different if that firm is looking for audit to be delivered.

“Is it something we can deliver commercial returns and deliver a quality product?

“[For] the FTSE 100 I don’t think we have yet seen the move in it to make it a particularly attractive market for us.”

Grant Thornton audits in the region of 6,000 businesses across the UK.

FTSE 100 companies pay around £600 million in audit and audit related fees annually.

James Barbour, director of technical policy at the Institute of Chartered Accountants of Scotland, said it was too early to say whether the new legislation will help to open up more competition in the audit market.

However he pointed out some large companies will be limited for choice if they use other accountancy firms for non-audit work.

He said: “There should be scope for firms below the Big Four to pick up some of the non-audit work.”

Mr Barbour believes firms outside the Big Four should be able to gain audit work over the longer term in the FTSE-350 but cracking the FTSE 100 is likely to remain difficult.