Relationship checking

In addition to financial interests, the identification of relationships or services provided to an international client is essential. Accordingly, where the entity has international operations (or has related entities with international operations) member firms must conduct a careful check for any relationships that exist with any Grant Thornton member firm or their affiliates. This check should be conducted where the member firm is proposing to provide either services to a prospective client or new services to existing clients. Existing relationships will not always present a conflict or independence threat but, having identified a relationship, the proposing partner and existing engagement partner can evaluate this risk before proceeding.

The Grant Thornton relationship checking policy requires that member firms and professional personnel from all service lines maintain their objectivity when delivering services to clients. This objectivity could be threatened if conflicting or prohibited services were delivered to the same client (such as insolvency services and audit, or representing opposing sides of a dispute as litigation support clients). Conducting international relationship checks in order to identify potential conflicts of interest and/or threats to independence prior to proposing on an engagement are important safeguards against these threats to objectivity.

These policies and procedures include a requirement for member firms to review the following lists: 

• global restricted list (GRL) for references to either the prospective client or any related entities. The GRL is a list of all public entities which are restricted due to an audit relationship 
• global conflicts list (GCL) for references to either the prospective client or any related entities. The GCL is a list of member firms' close business relationships with entities that are significant to the member firm and/or the client and where the nature of this relationship will impair the independence of the member firm and other member firms in Grant Thornton. In addition, the list would include names of entities where a member firm has provided, or is providing, a service and the terms of engagement specifically prohibit the provision of other services to that entity or other named entities.

If a member firm proposes a service to an entity on the GRL or the GCL, the member firm is required to consult with the engagement partner or relationship contact to ensure that any threats to independence created by the proposed service can be adequately safeguarded.

In order to perform properly an international relationship check, it is imperative to have an accurate and complete list of a prospective client’s related entities. Grant Thornton has provided each member firm access to a web based data service for related entity research. All member firms are expected to use this data service.

To date Grant Thornton has processed over 2,700 international relationship checks, covering attest engagements and non attest engagements (advisory services, tax, consulting) for entities with international operations. As a result of the international relationship checks processed, relationships that would result in conflicts of interest or threats to independence have been identified, resulting in the application of appropriate safeguards, or a decision not to proceed with the non audit opportunity.