KPMG has overcome competitors Deloitte and EY to be appointed as external auditors to British American Tobacco (BAT) after the £69bn company said earlier this month it was only considering these three as replacements for incumbents PwC
In a statement to the London Stock Exchange, BAT said: ‘KPMG has been appointed as its new external auditors for 2015 onwards.
PwC resigned from its position as external auditor with effect from 23 March 2015, having been in situ since BAT listed on the London Stock Exchange in September 1998.
Shareholder approval to confirm KPMG’s appointment will be sought at the AGM on 29 April 2015.
In early March, BAT said it had launched a competitive tender process after severing its 17 year relationship with PwC, citing both good practice as regards auditor rotation policy and also the prospect of proposed litigation by a group subsidiary against the firm.
The legal case relates to PwC’s 2008 and 2009 audits of paper maker Windward Prospects, a company with which BAT has had a long-running dispute over the cost of cleaning up chemical leaks which polluted two rivers in the US.
At the time BAT, which is the world’s second biggest cigarette maker, said: ‘Given the scale and global footprint of the company three firms have been invited to take part in the tender process being, Deloitte, Ernst & Young, and KPMG’.
According to BAT’s 2013 annual report and accounts, PwC was paid £9.7m in audit fees for the year, plus £4.6m for non-audit services.
In relation to the legal action over Windward, a PwC spokesperson said: ‘We do not believe there is merit to any potential claim against our firm and we will vigorously defend any such claim.’
Tony Cates, head of audit at KPMG in the UK, said: 'We are delighted to have won this prestigious audit. It was a very short and intensive tender process and our appointment is testament to our commitment to audit quality together with the team’s hard work, passion, energy and enthusiasm.'