PwC reinstated as Schroders auditor
KPMG tells Schroders it would breach regulatory requirements if appointed auditor
IN A REVERSAL OF FORTUNE, PwC has been reinstated as Schroders’ auditor after KPMG told the asset manager it would breach regulatory requirements if it took up the appointment.
PwC’s was quietly ushered back in as Shcroders’ auditor, having lost out to KPMG in January after auditing the company for more than 50 years. The about-turn was announced in Shroders’ annual report, in which it revealed that, since the tender process, KPMG revealed its appointment would conflict with other interests.
“KPMG already provided a number of services to the group and since the conclusion of the tender process KPMG advised the company that it did not meet the regulatory requirements for independence for all relevant group companies,” Schroders said.
Schroders’ added that, as its incumbent auditor, PwC had maintained its independence throughout the tender process, which included competing bids from Deloitte and Ernst & Young.
Though all four firms met the criteria for appointment, PwC “demonstrated better the resource, expertise, quality control and audit approach to deliver a high-quality audit service to Schroders.”
The company added that its recent appointment of Richard Keers, a PwC partner that had audited Schroders, as chief financial officer was “in line with the professional rules”.
Keers, who was PwC’s global relationship partner for Schroders from 2006 to 2010, joins Schroders in May when it will have been 26 months since he worked as the company’s auditor. ICAEW rules require a two-year cooling-off period before auditors can move to client companies.
KPMG and PwC declined to comment. Schroders was not immediately available for comment.
The audit was initially put out to tender last year amid a changing mood among large companies to the length of audit tenures. Last month, KPMG was appointed as auditors of insurer RSA from this year, with Deloitte stepping down; while PwC recently replaced E&Y as auditors of FTSE 250-listed oil and gas exploration group Cairn Energy.
In the financial year 2011/12, PwC earned £2.7m in audit fees, and £1.6m in non-audit fees for Schroders, according to the Financial Director 2013 Audit Survey.
The relationship between the Big Four and their clients has come under intense scrutiny from regulators and politicians, with the UK’s competition watchdog finding that market concentration has led to higher prices, lower quality and less innovation for companies and a failure to meet the demands of shareholders and investors – a claim vigorously denied by the Big Four.