Sacha Romanovitch ousted from top job at Grant Thornton UK

18 October 2018 6 min. read

The Chief Executive Officer of the UK’s fifth largest auditing and advisory firm has confirmed she will step down from the role at the end of 2018. Sacha Romanovitch was thought to be facing an imminent re-election campaign for a second term in the top job, however Partner disgruntlement at the company’s direction and a series of accounting scandals seem to have put paid to the idea.

The first UK female CEO of a major UK professional services firm will step down from Grant Thornton as soon as a successor is identified. The news sees Sacha Romanovitch become the second female CEO in the space of a year to be forced from the top job at a global accounting giant, with Cathy Engelbert having been blocked from running for a second term as CEO of Deloitte US earlier in 2018.

Both bosses had maintained some of the highest favourability among staff in the industry, however both had displeased the ranks of their firm's Partners, with Engelbert ultimately taking the fall for a poor 2017 at Deloitte, in which the firm was the victim of an embarrassing hacking scandal, along with a number of high-profile auditing blunders. In Romanovitch’s case, meanwhile, the end of her 28-year stay with Grant Thornton comes after a raft of changes angered a number of senior figures at the firm.

Sacha Romanovitch to leave accountancy firm Grant Thornton

Romanovitch introduced changes including capping her own salary at 20 times the firm’s average pay, and overhauling the firm’s partnership structure to make it a John Lewis-style profit-sharing scheme for all staff, rather than just Partners. Such was the fury which the latter of these directives inspired, that a group of 15 anonymous Partners and Directors at the firm leaked the contents of Romanovitch’s annual performance review and an unsigned complaint saying she had “misdirected” the firm, and accused her of pursuing a “socialist agenda.”

Initially Romanovitch rebuked the claims as the disapproving sniping of a “small cadre of Partners” unwilling to adapt with changing times, and there seemed to be a determination among her camp to fight on at the time. A number of individuals in Romanovitch’s circle even questioned whether the criticism she is now receiving was laced with a certain brand of “old guard” sexism, from long-time Partners who dislike the change to the order of things at the firm, and were hoping to push the CEO out.

However, what ultimately seems to have done for her is the firm’s failure to follow through with its pursuit of “profits with purpose.” While Romanovitch had justified Grant Thornton adopting a new emphasis on corporate social responsibility, moving away from working for clients which lacked those same principles, her claim that “if profits get unhinged from purpose it might not hurt you now, but it will come back and bite you on the bum” seems to have been undermined by a series of scandals involving the firm.

A very British coup

The accountancy industry is under intense scrutiny on multiple fronts, following a succession of damaging failures by both auditors and their regulator. Following the high-profile collapse of companies including the likes of Carillion in recent years, the auditing watchdog of the Financial Reporting Council (FRC) has found itself under intense pressure to improve its performance, having been widely criticised as being too timid and too close to the firms it is supervising. The watchdog is now the subject of a government review, led by Sir John Kingman, to determine if it is fit for the future.

With the stakes piled high for the ombudsman itself, the FRC is expected to double down on its efforts to appear tougher on lapses in accounting. Earlier in the year this saw the watchdog announce it would take the unprecedented step of monitoring 25% of all KPMG’s accounting work, while lambasting the Big Four as a whole for their falling standards. In August, Grant Thornton became tied up in this, when the UK’s fifth largest auditing and advisory firm was fined £4 million by the FRC, after four of its senior staffers admitted misconduct in handling the financial audits of Nichols and the University of Salford.

Now, the firm has become embroiled in a further investigation, just days before Romanovitch’s announcement that she would step down. Grant Thornton handles the accounts of Patisserie Holdings, owner of Patisserie Valerie, which has been rocked by an accounting scandal that left a £20 million black-hole in its books, and brought it close to collapse before obtaining a financial lifeline from its chairman Luke Johnson. After the story broke, the FRC said it was looking into the case, while the Serious Fraud Office also said separately it has opened an investigation into an unidentified individual in connection with the scandal.

Following the news of Romanovitch’s ousting, Ed Warner, independent chair of Grant Thornton UK’s partnership oversight board Grant Thornton said, “Following discussions with Sacha, the Board has agreed that a new CEO is the logical next step to create long-term sustainable profits for the firm.”

Romanovitch herself commented, “As we enter the next phase of our plans, following discussions with Grant Thornton’s board, we have agreed that the time is right for a new chief executive to take the firm forward. I will be working to support a smooth transition to our next chief executive, focusing on continuing to deliver sustainable value for our clients through our diverse and talented team.”

Grant Thornton is no exception when it comes to having an itchy trigger finger for the individual in its executive hot-seat, meanwhile. With the conflicting pressure of investors or Partners for profitability at all costs, against public scrutiny and the need for higher ethical standards, it is comes as little surprise that many CEOs manage to successfully walk that tight-rope for long in the UK. According to a recent survey by Strategy&, most of those who take the top job fail to last longer than five years.