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Barclays to end 120-year audit relationship with PwC

BARCLAYS is to replace PwC as its auditor, ending the Big Four firm’s 120-year tenure vetting the books of Britain’s second-largest bank.

PwC’s rivals will be able to compete for the chance to vet Barclays’ books as early as next year, while PwC will not be invited to take part as the bank moves to pre-empt EU and UK rules designed to encourage competition in the audit market

The decision to replace PwC, which has been Barclays’ auditor since 1896, was disclosed in the bank’s annual report in which it announced that the tender process would begin in 2015 or 2016 with respect to the 2017 or 2018 audit.

PwC is being replaced by the bank in order to comply with EU regulations that will require auditors to be replaced every 20 years, while the UK Competition Commission is implementing rules that will place a ten-year cap on audit tenures.

In its annual report, Barclays suggested it could have tendered this year – transitional guidance issued by the FRC, if applied to Barclays, would suggest a tender for the 2015 audit – but said the audit committee was “particularly conscious of the degree of change impacting the business”, including the finance function, as a result of its transformation programme and the “additional strain” that an audit tender and a change of firm would involve.

The audit committee also noted that both the group finance director Tushar Morzaria, and audit committee chairman Mike Ashley, are new in role, with Ashley previously serving as a partner at KPMG.

PwC’s audit work at the bank has previously come under scrutiny from the UK’s accounting watchdog. In December, the FRC closed its investigation into PwC’s conduct as auditors of Barclays Capital Securities after it deemed it unlikely that it would win a tribunal against the firm.

Launched in 2011, the investigation was concerned with the role of PwC in relation to the preparation of reports to the FSA in respect of Barclays Capital Securities’ compliance with the FSA’s Client Asset Rules for the periods from 1 December 2001 to 29 December 2009.

PwC was paid £44m last year by Barclays for its audit and non-audit work on behalf of the bank.

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  • Ian Parry

    Frankly from an independence perspective its appalling that the external audit relationship has lasted 120 years without a break. I am surprised that regulator’s such as the FRC have allowed this to last for so long. In view of the appalling record of some banks in recent years this is not a record to be proud of.

    • Motherhood

      Hear, hear! If regulators don’t have the powers to break an auditor’s relationship with a client for a public interest entity after (say) five years, they need to be given them and act on them. Regulators need the teeth to bite, and they mustn’t be a false set!