RSM TENON has started a tender process to appoint a new auditor after ditching PwC following a year of acrimony between the two accounting firms.
A shareholders ballot at the firm’s annual general meeting resulted in 64% voting against re-appointing PwC as auditor.
The move ends an increasingly fraught relationship between the two firms, which are embroiled in an argument over the work carried out by PwC as Tenon’s auditor.
Tenon was forced to restate its accounts earlier this year after errors were discovered that led to a 9% drop in revenue to £107.8m and a fall in profits. The restatement, linked to its accounting policy regarding referral fees, saw 2010/2011 year revenues reduced to £245m from £249m. Its operating profit fell to £5m from £13.9m, while overall profit fell to £683,000 from £7.5m.
Other issues included an error in recording employee bonuses that resulted in a reduction in the 2010/2011 profits by £3.7m, and errors relating to the amount recoverable on contracts.
In April, The Times reported RSM Tenon’s lawyers claimed there were “serious concerns” about the quality of PwC’s audit work. In response, PwC claimed Tenon had misled the audit firm during its work, and had flagged up to RSM Tenon’s audit committee accounting issues.
UK reporting watchdog the FRC became involved in the row when its disciplinary arm, the Accountacy and Actuarial Discipline Board, decided to initiate an investigation into PwC’s audit work following a consultation with the ICAEW.
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Commissioning and preparing an asset valuation for financial reporting should involve a three way dialogue between the client, valuer & auditor