Aston Martin searches for new auditor as KPMG declines opportunity to re-pitch

Aston Martin searches for new auditor as KPMG declines opportunity to re-pitch

There's already shuffling happening in the UK audit sector following the CMA's audit review just before Christmas

Aston Martin is hunting for a new auditor as KPMG has declined the opportunity to re-pitch for the job, according to Sky News.

The move comes less than three months after the car manufacturer of James Bond fame made its £4bn debut on the London Stock Exchange. The hunt for a new auditor so soon after the company’s initial public offering (IPO) is quite unusual.

Aston Martin has begun contacting firms to come on board as its new auditor, but it is not yet known which ones it is targeting.

Big Four firm KPMG has audited the businesses’ accounts since 2007, but has decided not to bid again as the UK audit profession faces much larger changes. Scandals like Patisserie Valerie and Carillion have triggered the need for audit reform.

Just before Christmas, the Competition and Markets Authority (CMA) released its review of the audit sector.

It listed several key reasons why audit quality had fallen down in recent years. This included the simple fact that companies selecting their own auditors meant they usually chose firms which had the best “cultural fit” or “chemistry” with them, rather than the one which would offer the toughest scrutiny.

The report also pointed out that choice was far too limited, with the Big Four conducting 97 percent of audits of the biggest firms. Yet Big Four audit quality may be diluted since 75 percent of their revenue comes from services other than audits, such as consulting.

The changes proposed in the report included a call to separate audit from consulting services, measures to increase the accountability of those chairing audit committees in firms, and imposing a joint audit regime so firms outside the Big Four can play a role in auditing the UK’s biggest companies, like in the French system.

Currently there is scepticism as to whether small auditors would be equipped to handle the scrutiny needed in auditing massive, multinational companies.

Sky News reported that Aston Martin’s search for a new auditor is for corporate governance reasons and has nothing to do with any dissatisfaction towards KPMG’s auditing ability.

The car business has, however, seen its shares fall significantly since last October. According to City A.M. its shares have fallen by around 30 percent since its initial IPO.

We know the Chair of Aston Martin’s audit committee, Richard Solomans, former CEO of InterContinental Hotels Group, will be heavily involved in choosing KPMG’s replacement.

It seems 2019 has got off to a busy start, as Vodafone has also decided to part with its auditor, PwC, after a potential conflict of interest with Phones4U going into administration. Aston Martin and Vodafone will be among other FTSE-100 companies tendering their audit contracts in the year ahead.

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