Thursday, 8 June 2017

BT picks new auditor after £530m Italian accounting crisis



BT Group has picked a new auditor to replace PricewaterhouseCoopers (PwC), months after the emergence of a £530m accounting crisis in its Global Services division.
 
Sky News understands that BT directors selected a winner from a two-horse race between EY and KPMG at a board meeting on Wednesday.


The new auditor, which will break PwC's 33-year stranglehold on one of corporate Britain's most lucrative professional services relationships, will be announced before the weekend, according to insiders.


BT has been racing to secure a new auditor for the last two months, confirming in its recent annual results statement that it expected to have identified a winner from a tender process by the time of its AGM in July.


The telecoms giant's search for a replacement for PwC has been complicated by accountancy profession rules which mean that auditors must be "cleansed" after undertaking prohibited non-audit services for companies for at least a year.


That requirement posed a headache for BT because of its extensive use of all of the "big four" audit firms.


The Financial Reporting Council, Britain's accountancy watchdog, has been kept informed about BT's progress in appointing a new auditor.


Some BT investors have raised questions about the possible appointment of KPMG to the role, because the telecoms group's outgoing chairman, Sir Mike Rake, spent a large chunk of his career with the accountancy firm.
 
 
In its 2016 annual report, BT said it proposed tendering its audit contract no later than 2019, with the new auditors appointed no later than for its financial year starting in April 2020.


However, the search was accelerated in the wake of the Italian accounting issues, and the new auditor will now take over from next year.


The Global Services writedown prompted substantial cuts to the bonuses and other share awards for Gavin Patterson, BT's chief executive, and the former finance director Tony Chanmugam.


The appointment of PwC's successor also comes as BT adjusts to new regulatory oversight of Openreach, its broadband infrastructure unit, and after a number of fines for its treatment of wholesale and retail customers.


BT recently announced a reduction in the fees charged to wholesale customers of Openreach - including Sky plc, the owner of Sky News - which the industry regulator Ofcom described as "a goodwill gesture".



SKY      News.