KPMG retains Standard Chartered audit
Standard Chartered maintains 40-year audit relationship with KPMG
KPMG has successfully retained its £9m audit of Standard Chartered, following a tender process that had been expected to end the Big Four firm’s 40-year tenure auditing the bank’s books.
The bank, which revealed it would be putting the audit contract on the market in August last year, is expected to confirm KPMG’s reappointment in its annual report in the spring, and is unlikely to make a formal announcement before then.
Earlier this month, the bank announced that its finance director Richard Meddings will step down at the end of June, with the bank entering into a major restructuring that will combine its wholesale and consumer banking divisions.
Simon Collins, UK chairman of KPMG, said the firm’s audit team was “put through their paces during the rigorous tender process” and that the tender process gave the bank’s audit committee “the opportunity to take a cold look at the rigour of our audit”.
The decision to reappoint KPMG comes amid pressure from regulators and politicians for large-listed businesses to end longstanding ties they have previously enjoyed with the firms that vet their accounts over concerns of ‘cosiness’.
KPMG faced criticism from shareholder governance group Pirc in 2012, after the investor lobbyists called on shareholders to vote against its reappointment as Standard Chartered’s auditors. Pirc had claimed that using IFRS had allowed the bank to overstate its financial position by £2.2bn.
Rules introduced last year by the UK Competition Commission, in addition to previous guidelines set down by the FRC, require FTSE 350 companies to re-tender their audit contracts every ten years have led to a rush of contracts changing hands.
KPMG is understood to be one of the few FTSE 100 auditors to have retained its work after facing a competitive tender process – the only other being PwC, which was reappointed as auditors of Schroders after KPMG was forced to decline the opportunity because a conflict of interest that emerged following the tender process.
Other companies to have changed auditor include HSBC, which switched from KPMG to PwC, along with Unilever, Marks & Spencer and Land Securities.