International cinema giant Cineworld replaces KPMG with PwC after Big Four firm refuses to bid in new audit tender, reports Philip Smith
Cineworld, the FTSE 250 international cinema complex operator, has appointed PwC as its new auditor with immediate effect, replacing KPMG, which had audited the group since 2004.
The $2.2m (£1.73m) audit was lasted tendered in 2016 – Cineworld reported in its latest annual report that it would be required to retender no later than 2026, the point at which KPMG would have been required to rotate off the account.
In a statement, Cineworld said: ‘The company's previous auditor, KPMG LLP, submitted its letter of resignation to the Board of Directors of the Company on 17 June 2019, along with a "statement of reasons" for its resignation.’ The move came after Cineworld had conducted new audit tender process ‘in accordance with good corporate governance policy on auditor rotation’.
In its resignation letter, KPMG said: ‘The reason connected with our ceasing to hold office is the holding of a competitive tender for the audit, in which we declined to participate as we did not consider that it was likely that we would be able to agree acceptable commercial terms.’
Cineworld has recently completed a takeover of US cinema operator Regal Entertainment Group, which KPMG had also audited since 2001.
The audit fees paid to KPMG jumped more than 200% between 2017 and 2018 – Cineworld’s annual report revealed the group had paid $700,000 for its audit in 2017, as well as $1.7m in non-audit services to KPMG.
Earlier this year, Julie Southern stepped down as audit committee chair, replaced by Dean Moore, a chartered accountant who qualified with Grant Thornton before taking on a number of roles in industry, including Group FD of N Brown. Southern trained with PwC.