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Wednesday, Jun 7, 2023

Grant Thornton Plans Return Engagement

Grant Thornton LLP in September will open a San Fernando Valley office after a six-year absence from the market. The new unit, which will be located in Warner Center, is initially intended to help service the Valley-area clients currently on the company’s roster. But officials said they also expect to generate new business for the firm, drawn from the many mid-sized companies that call the Valley home. “In my mind what’s happened is the demand for auditing services has just increased dramatically overnight, if you will,” said Mark A. Bagaason, managing partner at Grant Thornton who oversees the Los Angeles and Irvine areas. “We had growth this last year of 35 percent in the U.S. so we have been quite successful in attracting new clients and new people including new partners to our organization, and we would hope to continue that through the Woodland Hills location.” The requirements of the Sarbanes-Oxley Act or SOX, which imposes additional auditing procedures on publicly-held companies, has created a sort of shift within the accounting industry. Faced with a dramatically increased workload and a limited supply of workers, the Big Four accounting firms, Deloitte, Ernst & Young, KPMG and PricewaterhouseCoopers, have in some cases, relinquished some of their clients, and in other cases, clients, typically smaller companies, have left these firms to seek smaller ones more compatible with their own businesses. The result is that the second tier of accounting firms have picked up a considerable amount of new business. “There has been a shift,” said Peter J. Iannone, director at accounting and financial services firm CBIZ Southern California LLC., whose territory includes the San Fernando and Conejo valleys. “It was a movement of firms from the top four to the top 10.” Most of the shift has taken place among small- and mid-cap companies who comprise the majority of businesses in the Valley area. “The Camarillo basin, the San Fernando Valley, the Conejo Valley are all places where entrepreneurs look to,” said Iannone. “The companies out here, there’s a ton of startups, and small public firms trying to do what they can to become medium-size firms.” Not just publicly held companies, but private companies too are seeking new accounting firms. “The firms not renewing their relationships are public as well as private so there is a significant opportunity to attract new business, Bagaason said.” Grant Thornton, a global $2.1-billion accounting, tax and business advisory firm, operates 49 offices in the U.S., where it generates about $635 million in revenues. The company acquired a small Valley accounting practice in the mid-1990s, but when the lease expired on the Ventura Boulevard office, Grant Thornton moved the accounts housed there to its downtown L.A. location. Bagaason said Grant Thornton hopes to open in the Valley, which will be a full-service office, with 20 to 30 workers who would service the company’s current accounts. “We hope that within a couple of years that we’ll have about 80 people in that office,” he added. Bagaason said the firm has been successful in attracting new employees, but staffing has been challenging for all accounting firms since the Sarbanes-Oxley legislation went into effect. Instituting the new procedures needed requires not only audit and accounting skills, but also an understanding of the client’s business and how it operates. College graduates, even those with accounting degrees, are ill-equipped for the task, and the workload increase has been so dramatic, it has been difficult for many firms to recruit enough professionals from competitors. “All the firms are running ads all the time,” said Iannone. “They’re paying recruiting bonuses to existing employees if they help find somebody. We’re doing what we can to find people, and I know from the talks I’ve had with friends of mine, they have the exact same challenge.”

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