David McDonnell appointed for second term as Chief Executive Officer, Grant Thornton International

Press release – June 2006

Second Annual Review published – new competition in international markets and surging demand in emerging regions

David McDonnell has been appointed for a second term of three years as Chief Executive Officer of international accounting organisation, Grant Thornton International. In the 2006 Grant Thornton International Annual Review and Transparency Report published today, he outlines the significant impact on competition being realised through a more fluid market and the surge in demand from emerging markets worldwide such as Asia, eastern Europe and South America.

McDonnell’s second term comes into force from July 2006. He will serve as Chief Executive Officer through to 2009. The organisation currently has 92 member firms worldwide, who collectively billed approximately US$2,454 million of fee income in 2005.

The Annual Review was introduced in 2005 by McDonnell as part of Grant Thornton International’s commitment to help restore confidence in the accounting profession through transparent reporting of its activities. The 2006 Review highlights the performance of the Grant Thornton International member firms and an assessment of the current state of the profession and its prospects.

“The past four years have seen the accounting profession undergo its most profound shift in nearly two decades. The major corporate collapses, and the associated demise of Andersen, put into reverse the trend of several decades, and exposed the risks to large companies of only considering a ‘Big Four’ appointment.

“The consequences for businesses of such radical regulatory change have been profound,” continued McDonnell. “Motivated initially by regulatory moves and subsequently by the visible benefits of a more fluid accounting market, businesses have embraced the idea of greater choice among their professional advisers, both for audit and non-audit services alike. Good practice now dictates that companies seek professional services from a broad group of providers.”

"The regulatory response since 2002 – initially in the US, but quickly spreading to jurisdictions throughout the world - has been a key driver of growth for Grant Thornton International member firms. Total aggregate member firm income rose by 17% in 2005; in Asia Pacific the rise was 26% driven by the growth of the Chinese and Indian economies; in the Americas it was 23%; and 10% in Europe, the Middle East and Africa. Collectively, the member firms have been able to record strong double digit growth for the last three years.

“The regulatory changes and market shake up of the last few years have provided Grant Thornton International member firms significant opportunities for growth. And I see that trend continuing into the future,” continued McDonnell. “The fast growing markets in Asia, central and eastern Europe and South America are emerging as key drivers for cross-border accounting operations. In more established markets, falling trade barriers and the influence of technology mean that smaller companies now have access to distant countries and markets.”

McDonnell announced continued commitment to Grant Thornton International’s infrastructure and in particular in the key markets of China and India. He emphasised the importance of continuing the reform of the profession in coming years: “As a network we have focused on our infrastructure – and no other organisation outside the Big Four can match it. But there is no room for complacency. Public scrutiny and the need for transparent quality standards mean that we will need to continue our commitment to the transformation of the profession.

“There has been a vigorous debate in the profession about the very role of the audit and its place in safeguarding the public interest. I believe that has been good for the profession. We have taken huge steps toward rebuilding corporate and investor trust, but there remains further work to do in the coming years. Through the high level involvement of more than 200 individuals in member firms worldwide, our organisation is committed to remaining engaged in debates across the globe around further modifications to regulatory concerns such as transparency, responsibility and standards."

Ends

Notes to editors

The Grant Thornton International Annual Review highlights the performance of Grant Thornton International member firms, their presence and role in the profession, the governance and quality control structures of the organisation and its approach to risk management. It also features how the international organisation provides "quality-first" support to member firms for key practice areas for the benefit of the investing public.



Through the annual review's content, the commitment of Grant Thornton International to transparency is demonstrated, in line with the Forum of Firms’ recommendation on sharing information about the structure, policies, governance and performance of international accounting organisations. To download a copy of the Grant Thornton International Annual Review 2006, please visit www.gti.org