FRC avoids charge of “do as I say, not as I do”, by changing its auditor
WHETHER BECAUSE OF or in spite of the EC and Competition Commission investigations, audit tendering has become in vogue among the boards of the FTSE 350.
Recent weeks have seen FTSE 100 investment group Schroders put its audit work out to tender – PwC having held the audit for more than 50 years – while FTSE 250 logistics business Stobart Group has changed from E&Y to KPMG.
Elsewhere in the FTSE 100, ITV is reported to be reviewing the audit contract held by KPMG since 2004.
Such changes are a sign of the pressure being exerted by regulators over audit tenures. It is interesting, then, to note that the FRC changed auditor from Crowe Clark Whitehill to PKF in October last year. CCW had been auditor since the FRC’s inception in 1990, having successfully won a retendering contract in 2006.
Last week, the FRC amended the UK’s governance code so that FTSE 350 companies will have to put their external audit out to tender at least every ten years or explain why they haven’t.
The watchdog’s stance would have been difficult to justify if it had not practiced what it preached.