KPMG has been put on notice that the firm’s 79-year relationship with Associated British Foods will come to an end next year, as the UK multinational food processing and retail specialist has signalled it is putting its external audit out to tender in response to new regulatory requirements
In its 2014 annual report Associated British Foods, which has fast fashion chain Primark and long established brands including Ovaltine, Ryvita and Twinings in its diverse portfolio, said it has notified KPMG 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.
The report noted that KPMG has been reappointed annually as auditor to the company since its incorporation in 1935. It said the company made the decision to look for a change of auditor ‘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 and Market Authority’s (CMA) order requiring mandatory audit tendering at ten-year intervals which comes into force in 2015.’
Richard Pinckard undertook a detailed review of the external audit arrangements across the group when he was appointed as KPMG lead audit partner for the financial year ended September 2012, and in its 2013 annual report Associated British Foods said it was satisfied with regard to auditor independence and objectivity.
However, the company indicated a change of auditor was required in response to new regulatory requirements, suggesting at the time that this would coincide with the ending of the lead partner rotation.
KPMG was paid a total of £9.1m by Associated British Foods for the year ended 13 September 2014, of which £5.8m was for audit work while 3.2m related to non-audit work and £100,000 to work related to pensions.