FTSE 100 ABF changes auditor after 80 years with KPMG

EY has been successful in winning the contract to conduct external audit work for Associated British Foods following a tender announced last year, which sees the contract – previously with KPMG since 1935 – handed to another Big Four firm

Pending shareholder approval at Associated British Food’s AGM in December, EY is expected to be appointed for the 2016 audit.

Audit fees for the year ending 2014 were £5.8m while fees for non audit work were £3.2m.

In its corporate governance report within the company’s 2014 accounts, ABF said that Although KPMG LLP or its predecessor firms have been the Company’s auditor for many years, the firm periodically changes its audit partners at a group, divisional and country level, in accordance with professional and regulatory standards, in order to protect independence and objectivity and provide fresh challenge to the business.

‘Whilst the company has kept the effectiveness of the relationship under review, no formal tender of the audit process has been carried out since the original appointment.

‘Mindful of the requirements of the UK Corporate Governance Code that the audit should be put out to tender every ten years, and the UK Competition & Market Authority’s Order requiring mandatory audit tendering at ten-year intervals which comes into force in 2015, the company has notified KPMG LLP of its intention to put the audit out to tender during 2015, with a view to a new firm being appointed to audit the financial statements for the year ending 17 September 2016,’ ABF said.

Hywel Ball, EY's UK head of audit, said the firm is incredibly proud to have been proposed as auditors.

‘ABF is a leader within its industry and we look forward to working with the board as they continue their growth plans for the future.’

‘Since January, EY has been proposed or selected as auditors to four of the country's largest businesses, including Royal Dutch Shell. New EU audit reforms have increased the number of audits that are coming up for tender, while our global scale, innovative approach to the audit, and deep sector insights ensures that we are well-positioned to serve these companies,’ said Ball.

Associated British Foods plc is the latest of a number of large UK corporates to select EY as auditor. Other recent examples include the RELX group, Royal Dutch Shell, Royal Bank of Scotland, Sainsbury's, The London Stock Exchange Group, The Co-operative Bank, Sage Group, Land Securities, the BBC, Dyson and the Audit Commission.

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