PracticeConsultingKPMG takes over as PricewaterhouseCoopers sacked by insurance giant

KPMG takes over as PricewaterhouseCoopers sacked by insurance giant

Prudential has dropped PricewaterhouseCoopers from one of the most lucrative audit contracts in the UK and appointed KPMG, which undercut PwC's 1998 fees by £500,000, as its new auditor.

Last year, PwC earned £2m in audit fees alone from the Pru. However, it also secured £8.7m by providing consultancy, regulatory returns audits and tax advice. Prudential, which manages around £150bn of investors’ money, confirmed that it had appointed KPMG as group auditors with effect from 31 December 1999. This is subject to regulatory approval. A spokesman said: ‘This is the culmination of a rigorous tendering process of the leading accountancy firms, including the incumbent PwC. Prudential regularly reviews its major suppliers to ensure it is receiving optimum value. The new arrangements will result in savings of half a million pounds on last year’s audit fees. ‘The change of auditor was also prompted by the changing shape of the Prudential group’s business. ‘We are restructuring our business in the UK, we have acquired Scottish Amicable and M&G and our overseas business is developing rapidly. This has given rise to this review of the group’s audit requirements.’A KPMG spokesman confirmed that it was already working on this year’s accounts. ‘We are very pleased to have the chance to audit the Pru,’ he added.PwC, which won the Prudential audit in 1991, said it hoped to continue working with the company. ‘They are still clients of ours. We are very disappointed not to have retained the Prudential audit but we look forward to working with them in the future,’ a spokesman added.

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