PwC declines audit role at Russian gold miner
25 Aug 2020
PwC has announced it is not able to accept its proposed appointment as auditor to FTSE 250 company Petropavlovsk, citing governance concerns at the troubled Russian gold mining company
25 Aug 2020
PwC was selected following a competitive tender process earlier this year, and was due to begin work as the statutory auditor for the year ending 31 December 2020.
However, Petropavlovsk has now put out a statement saying PwC had stated it was not able to accept its proposed appointment as the company's auditors and awaited the results of a general meeting to reassess its position.
Following that meeting, which took place last week, Petropavlovsk received a letter from PwC confirming that it does not intend to accept its proposed appointment.
Petropavlovsk’s statement said: ‘PwC has not performed any work for the company since its proposed appointment as auditor.
‘PwC has also declined to enter into any engagement with the board regarding its reasons for resignation.
‘However, in its letter of resignation, PwC has cited the reasons for its resignation as: "the recent significant changes in the composition of the board of directors, namely the removal of the majority of both independent and executive directors, and our concerns over the governance environment and the lack of clarity as to the future direction of the Petropavlovsk group."’
Petropavlovsk said its board is in the process of engaging an external search consultancy to assist it in making further appointments of independent non-executive directors and ‘remains committed to ensuring it has the necessary strength and breadth, with a transparent governance structure that will command the trust and support of all stakeholders.’
The company, which has seen its share price rise steeply on the back of a hike in gold prices, has been riven by dissent amongst its major shareholders.
Petropavlovsk said the board has commenced work on identifying a new auditor and a tender process is underway, with a further announcement to be made in due course.
An update on the publication of the company's interim accounts will also be provided later. Petropavlovsk’s previous auditor, Deloitte, had been in place since 2009. The firm did not seek reappointment, citing its length of service and concerns about the company’s ‘internal controls and systems for financial reporting’, according to a shareholder circular.
According to its 2019 annual report, Petropavlovsk paid Deloitte $1.45m (£1.1m) in audit fees for the year, plus an additional $737,000 (£562,000) for non-audit services.