Ferrexpo hires MHA MacIntyre Hudson for £2.4m audit

FTSE 250 Swiss mining group Ferrexpo has named MHA MacIntyre Hudson  as its new auditor, following Deloitte’s resignation from the position earlier this year amid concerns about delays to an independent investigation into a possible ‘misappropriation’ of corporate social responsibility (CSR) funds

This is the second time Ferrexpo has changed auditor in two years, having only appointed its last auditor, Deloitte in 2017 after dropping Big Four firm EY.

In a regulatory statement, Ferrexpo said that following the completion of an audit tender led by the company's audit committee, the board has approved the appointment of MHA MacIntyre Hudson, the UK member of Baker Tilly International, as its auditor for the current financial year with immediate effect, taking over from former incumbent Deloitte who resigned as auditor earlier this year.

According to Ferrexpo’s 2018 annual report, Deloitte was paid just over $3m (£2.4m) for audit services and a total of $3.16m when non-audit service fees were taken into account. This was a substantial increase from the $1.2m in audit fees and $1.34m total the firm received the previous year.

The statement continued: ‘The board of Ferrexpo looks forward to working with MHA MacIntyre Hudson and Baker Tilly International, one of the top ten audit networks in the world, which has significant audit capability in Ukraine having operated there since 1999.

‘As previously indicated the group's unaudited half year results will be published on 2 August 2019 and due to the timing of the appointment will not be subject to review by MHA MacIntyre Hudson.’

In April, Deloitte resigned as Ferrexpo’s auditor citing concerns about possible ‘discrepancies’ in bank statements relating to the company’s CSR scheme and its delays in setting up an independent forensic investigation.

The firm had  issued a qualified opinion on Ferrexpo’s annual accounts relating to possible ‘misappropriation’ of CSR funds donated to a charity called Blooming Land, which operates in Ukraine, one of the iron ore company’s key markets. Deloitte asked for copies of original bank statements and also the results of the independent investigation within a specified timeframe, which was not met.

The allegations have been strongly denied by Ferrexpo, which said it had ‘formed its own considered view and believes it initiated the formal independent review at the appropriate time, given the other steps it was taking and all the surrounding circumstances.’

Pat Sweet

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