Looking at the graph opposite, it is still striking how much more the firms earn in non-audit fees than in statutory audit fees from their FTSE 100 clients. The average ratio is 1.9 to one, but this is less than the three to one ration in last year's survey.
However, the large number of companies who included notes on new policies regarding non-audit services in their annual reports indicates that this ratio could drop considerably further in next year's survey, once those changes have had a chance to take their full effect.
One example is BT which states in its annual report: 'In order to maintain the independence of the external auditors, the board has determined policies as to what non-audit services can be provided by the company's external auditors and the approval processes related to them. Under those policies, work of a consultancy nature will not be offered to the external auditors unless there are clear efficiencies and value-added benefits to the company.'
Another typical example from GKN reads: 'The auditors are excluded from invitations to undertake assignments of a consultancy nature, except where their detailed knowledge of the group in comparison to other professional services firms is considered by the committee to represent a tangible advantage to the group and it shareholders.'
NOTES ON COMPILATION OF SURVEY
We have used the most recent annual reports available. The constituents of the FTSE 100 were correct at the end of 3 August 2003, with the exception of Six Continents, which has demerged into two FTSE 100 companies, Mitchells & Butlers and Intercontinental Hotels. Since neither of the new companies has produced full-year reports yet, we have included the last available full-year report from Six Continents. The new companies will both be audited by E&Y, which audited Six Continents. The constituents and ranking of the largest 10 companies in the FTSE 100 were correct on 10 August 2003. We have separately listed audit-related fees where companies separate them in their annual reports.
| FTSE 100 AUDITOR FEES SURVEY SPECIAL REPORTS Auditor Statutory Audit Other Total audit fee related fees fees (m) (m) (m) (m) 3i Group E&Y 0.7 0.2 0.5 1.4 Abbey National D&T 4.2 1.1 4.6 9.9 Alliance & Leicester D&T 0.5 0.5 2.3 3.3 Alliance UniChem(1 D&T 0.7 0.7 1.4 Allied Domecq KPMG 6 4 10 Amersham PwC 1.6 0.5 2.1 Amvescap E&Y 1.8 0.6 2.4 Anglo American(2* D&T 6.2 5 11.2 Associated British Foods KPMG 2.3 1.4 3.7 AstraZeneca(3* KPMG 2.2 2.2 4.4 Aviva(4 E&Y 4.6 4.2 6.6 15.4 BAA D&T 0.5 0.4 0.5 1.4 BAE Systems KPMG 3.6 3.1 3.8 10.5 BG Group PwC 1.4 0.2 4.7 6.3 BHP Billiton(5* KPMG/PwC 3.7 9.4 13.1 BOC Group PwC 1.9 5.1 7 BP(6* E&Y 8.7 21.9 18.8 49.4 BT Group PwC 2.9 1.8 7.8 12.5 Barclays PwC 5 9 8 22 Boots Group KPMG 0.9 3.8 4.7 Bradford & Bingley KPMG 0.6 0.5 0.8 1.9 British American Tobacco(7 PwC 6.5 7.2 13.7 British Land Co(8 D&T 0.6 0.2 1 1.8 British Sky Broadcasting Group(9 D&T 0.7 1.2 6.3 8.2 Bunzl KPMG 1.6 1.9 3.5 Cable & Wireless KPMG 4.9 5 9.9 Cadbury Schweppes(10 D&T 3 1.5 0.7 5.2 Centrica PwC 1.7 1.2 6.3 9.2 Compass Group(11 D&T 2 3 5 Daily Mail & General Trust D&T 1.8 1 2.8 Diageo(12 KPMG 3.3 1.5 17.4 22.2 Dixons Group(13 D&T 0.7 1.1 1.8 Emap PwC 0.7 2.2 2.9 Exel(14 E&Y 1.8 1.5 3.3 Foreign & Colonial Investment Trust PwC 0.03 0.02 0.05 Friends Provident(15 PwC/E&Y 0.9 2.8 3.7 GKN PwC 2.9 1.4 4.3 GUS PwC 2 11 13 Gallaher Group PwC 0.9 0.9 3.8 5.6 GlaxoSmithKline(16 PwC 6.1 14.8 20.9 Granada KPMG 0.4 0.9 1.3 HBOS(17 KPMG 3.7 3.6 4.4 11.7 HSBC Holdings* KPMG 15.5 4 2.6 22.1 Hanson E&Y 1.9 1.2 1.4 4.5 Hilton Group E&Y 1.6 1.3 2.9 Imperial Chemical Industries KPMG 2.8 2.1 1.2 6.1 Imperial Tobacco Group PwC 2.3 4.8 7.1 Johnson Matthey(18 KPMG 1.1 0.1 0.7 1.9 Kelda Group E&Y 0.5 0.3 0.8 Kingfisher(19 PwC 1.9 8 9.9 Land Securities Group(20 PwC 0.5 1.7 2.2 Legal & General Group PwC 1 0.5 1.1 2.6 Liberty Intl PwC 0.4 0.4 0.8 Lloyds TSB Group PwC 4.8 3.9 1.8 10.5 Man Group PwC 1.2 0.5 1.1 2.8 Marks & Spencer Group PwC 0.9 1.4 2.3 mmO2(21 PwC 1 1.2 2.2 Morrison (Wm) Supermarkets KPMG 0.14 1 1.14 National Grid Transco PwC 3 4 6 13 Next E&Y 0.3 0.6 0.9 Northern Rock PwC 0.6 0.6 1.2 Old Mutual KPMG 4 1 5 10 P&O Princess Cruises(22* KPMG 0.6 1.6 2.1 4.3 Pearson(23 PwC 3 3 6 Provident Financial(24 PwC 0.4 1.9 2.3 Prudential(25 KPMG 3.3 1.4 4.5 9.2 Reckitt Benckiser(26 PwC 1.8 0.4 0.8 3 Reed Elsevier Group plc D&T 2.3 0.7 2.9 5.9 Rentokil Initial PwC 2.3 1.2 3.5 Reuters Group(27 PwC 2.3 1.5 9.1 12.9 Rexam(28 E&Y 1.8 2.1 3.9 Rio Tinto(29 PwC 2.7 3 5.7 Rolls-Royce Group(30 KPMG 3.2 1.6 4.8 Royal & Sun Alliance PwC 3.4 1.2 7.5 12.1 Royal Bank of Scotland D&T 5.9 6.3 12.2 SABMiller* PwC 3.1 4.4 7.5 Safeway KPMG 0.3 0.5 0.8 Sage Group(31 PwC 0.5 2 2.5 Sainsbury (J) PwC 0.6 1.4 2 Schroders PwC 1.1 0.1 1.6 2.8 Scottish & Newcastle E&Y 1.2 3.6 4.8 Scottish & Southern Energy KPMG 0.3 0.06 0.36 Scottish Power(32 PwC 1.5 6.4 7.9 Severn Trent PwC 0.8 0.8 1.6 Shell Transport & Trading Co* KPMG/PwC 15.6 21.9 37.5 Shire Pharmaceuticals Group D&T 0.6 1 1.6 Six Continents(33 E&Y 1.1 5.6 6.7 Smith & Nephew(34 E&Y 0.9 3.1 4 Smiths Group PwC 3.8 1.4 5.2 Standard Chartered* KPMG 3.2 5.8 9 Tesco PwC 0.9 1.8 2.7 Tomkins D&T 2.2 1.1 3.3 Unilever** PwC 10.6 9.1 15.5 35.2 United Utilities D&T 0.5 0.5 1 Vodafone Group D&T 5 15 20 WPP Group D&T 5.4 0.3 1.9 7.6 Whitbread E&Y 0.6 0.3 0.9 Wolseley PwC 1.6 3.3 4.9 Xstrata(35* E&Y 0.7 8.6 9.3 Totals 246.8 86.6 380.6 714 Auditor Previous Previous Year end Days to audit fee total fees sign off (m) (m) 3i Group E&Y 0.6 1.8 31.03.03 44 Abbey National D&T 4.1 7.7 31.12.02 56 Alliance & Leicester D&T 0.4 1.7 31.12.02 51 Alliance UniChem(1 D&T 0.6 1.1 31.12.02 69 Allied Domecq KPMG 2 6 31.08.02 58 Amersham PwC 1.3 1.7 31.12.02 57 Amvescap E&Y 1.7 4 31.12.02 59 Anglo American(2* D&T 5 7.5 31.12.02 58 Associated British Foods KPMG 2.2 5.2 14.09.02 52 AstraZeneca(3* KPMG 1.6 4.8 31.12.02 30 Aviva(4 E&Y 3.9 14.7 31.12.02 56 BAA D&T 0.5 1.3 31.03.03 63 BAE Systems KPMG 3.3 12.4 31.12.02 50 BG Group PwC 1.4 3 31.12.02 52 BHP Billiton(5* KPMG/PwC 3.1 15.6 30.06.02 71 BOC Group PwC 2 4.2 30.09.02 53 BP(6* E&Y 8.1 51.9 31.12.02 42 BT Group PwC 2.7 26.9 31.03.03 51 Barclays PwC 5 26 31.12.02 43 Boots Group KPMG 0.9 3 31.03.03 59 Bradford & Bingley KPMG 0.6 1.8 31.12.02 48 British American Tobacco(7 PwC 5.9 20.5 31.12.02 56 British Land Co(8 D&T 0.6 2.4 31.03.03 57 British Sky Broadcasting Group(9 D&T 0.6 14.4 30.06.02 30 Bunzl KPMG 1.5 3.9 31.12.02 55 Cable & Wireless KPMG 2.6 8.2 31.03.03 64 Cadbury Schweppes(10 D&T 3 7 29.12.02 64 Centrica PwC 1.6 9.6 31.12.02 51 Compass Group(11 D&T 2 7 30.09.02 64 Daily Mail & General Trust D&T 1.8 3 29.09.02 59 Diageo(12 KPMG 2.8 17.1 30.06.02 66 Dixons Group(13 D&T 0.6 1.4 03.05.03 53 Emap PwC 0.6 1.7 31.03.03 58 Exel(14 E&Y 1.7 3.2 31.12.02 66 Foreign & Colonial Investment Trust PwC 0.03 0.05 31.12.02 58 Friends Provident(15 PwC/E&Y 0.6 6.1 31.12.02 63 GKN PwC 2.6 6.4 31.12.02 59 GUS PwC 2 8 31.03.03 57 Gallaher Group PwC 0.8 8.7 31.12.02 63 GlaxoSmithKline(16 PwC 7.2 35.7 31.12.02 69 Granada KPMG 0.4 2.2 30.09.02 58 HBOS(17 KPMG 3.4 23 31.12.02 55 HSBC Holdings* KPMG 15.2 23.5 31.12.02 62 Hanson E&Y 1.5 3.6 31.12.02 51 Hilton Group E&Y 1.6 3.5 31.12.02 58 Imperial Chemical Industries KPMG 2.8 5.9 31.12.02 43 Imperial Tobacco Group PwC 0.8 2.9 28.09.02 58 Johnson Matthey(18 KPMG 1.1 1.9 31.03.03 65 Kelda Group E&Y 0.4 0.8 31.03.03 66 Kingfisher(19 PwC 2.2 9.7 01.02.03 74 Land Securities Group(20 PwC 0.3 1.6 31.03.03 51 Legal & General Group PwC 1 2 31.12.02 57 Liberty Intl PwC 0.3 0.7 31.12.02 43 Lloyds TSB Group PwC 4 21.1 31.12.02 44 Man Group PwC 0.8 1 31.03.03 52 Marks & Spencer Group PwC 1 3.5 29.03.03 51 mmO2(21 PwC 0.9 1.3 31.03.03 50 Morrison (Wm) Supermarkets KPMG 0.15 0.2 02.02.03 53 National Grid Transco PwC 4 14 31.03.03 50 Next E&Y 0.2 0.23 01.02.03 54 Northern Rock PwC 0.4 1 31.12.02 56 Old Mutual KPMG 4 7 31.12.02 55 P&O Princess Cruises(22* KPMG 0.5 4.1 31.12.02 37 Pearson(23 PwC 2 7 31.12.02 62 Provident Financial(24 PwC 0.3 1.2 31.12.02 64 Prudential(25 KPMG 2.3 20.1 31.12.02 80 Reckitt Benckiser(26 PwC 1.8 3.5 31.12.02 66 Reed Elsevier Group plc D&T 2.5 5.9 31.12.02 50 Rentokil Initial PwC 2.3 3 31.12.02 85 Reuters Group(27 PwC 2.2 15.1 31.12.02 46 Rexam(28 E&Y 2 3 31.12.02 65 Rio Tinto(29 PwC 2.8 6.5 31.12.02 51 Rolls-Royce Group(30 KPMG 3 5 31.12.02 62 Royal & Sun Alliance PwC 2.8 26.3 31.12.02 64 Royal Bank of Scotland D&T 5.5 12.5 31.12.02 57 SABMiller* PwC 1.8 6.2 31.03.03 70 Safeway KPMG 0.3 0.35 29.03.03 53 Sage Group(31 PwC 0.5 0.8 30.09.02 64 Sainsbury (J) PwC 0.5 2.7 29.03.03 52 Schroders PwC 0.8 1.4 31.12.02 71 Scottish & Newcastle E&Y 1.1 4.4 27.04.03 64 Scottish & Southern Energy KPMG 0.2 0.27 31.03.03 51 Scottish Power(32 PwC 1.5 18.1 31.03.03 37 Severn Trent PwC 0.6 1.4 31.03.03 71 Shell Transport & Trading Co* KPMG/PwC 11.2 31.2 31.12.02 64 Shire Pharmaceuticals Group D&T 0.5 1.8 31.12.02 120 Six Continents(33 E&Y 1 7.3 30.09.02 65 Smith & Nephew(34 E&Y 0.8 3.3 31.12.02 38 Smiths Group PwC 3.4 5.1 31.07.02 58 Standard Chartered* KPMG 2.9 6.6 31.12.02 50 Tesco PwC 0.8 2 22.02.03 44 Tomkins D&T 2.3 2.6 31.12.02 63 Unilever** PwC 11.3 64.8 31.12.02 63 United Utilities D&T 0.4 0.5 31.03.03 51 Vodafone Group D&T 4 26 31.03.03 57 WPP Group D&T 5.1 16.8 31.12.02 136 Whitbread E&Y 0.6 1.6 01.03.03 60 Wolseley PwC 1.5 5.7 31.07.02 55 Xstrata(35* E&Y 0.3 0.9 31.12.02 78 Totals 219.4 822.3 * fees have been converted from US$ at a rate of 1:$1.60 ** fees have been converted from euros at a rate of 1:EUR1.42 FTSE 100 CHANGES SINCE 2002 SURVEY DROPPED OUT AUDITOR COMMENTS Brambles Industries D&T Relegated to FTSE 250 British Airways E&Y Relegated to FTSE 250 Canary Wharf Group D&T Relegated to FTSE 250 Capita Group E&Y Relegated to FTSE 250 Corus Group PwC Relegated to FTSE 250 EMI Group E&Y Relegated to FTSE 250 Hays D&T Relegated to FTSE 250 International Power KPMG Relegated to FTSE 250 Invensys E&Y Relegated to FTSE 250 Lattice Group PwC Acquired by National Grid Transco New entry Auditor Comments Alliance Unichem D&T Promoted from FTSE 250 Emap PwC Promoted from FTSE 250 Foreign & Colonial Investment Trust PwC Promoted from FTSE 250 Kelda Group E&Y Promoted from FTSE 250 Liberty International PwC Promoted from FTSE 250 Provident Financial PwC Promoted from FTSE 250 Rexam E&Y Promoted from FTSE 250 Tomkins D&T Promoted from FTSE 250 Whitbread E&Y Promoted from FTSE 250 Last year's survey ran in the September 2002 issue, p13. |
1. 0.4m in audit fees and 0.2m in other fees were paid to other auditors
2. 5m of statutory audit fee was paid outside the UK
3. 1.9m of non-audit fees were paid outside the UK
4. 1.5m of audit and audit-related fees were paid to other firms
5. 2.4m in audit fees and 2.5m for other services were paid to other firms
6. Fee for UK audit was 3.7m
7. 4.8m of non-audit fees were paid overseas
8. Previous auditor AA. 0.2m of non-audit fees were paid to AA. 1.2m was paid to other firms for IT related and tax services.
9. D&T received a further 4m through the performance of sub-contracted services for one of the group's call centre consultants
10. D&T appointed 1 August 2002. 1m of non-audit fees were paid to other firms during the year.
11. 2m of fees were charged to acquisition and disposal costs
12. 7.9m of non-audit fees were paid overseas
13. Figures are for 53 weeks ending 3 May 2003
14. 1.3m of non-audit fees were paid overseas
15. PwC are group auditors. E&Y audits ISIS Asset Management and its subsidiaries
16. 9.6m of non-audit fees were paid overseas
17. 0.6m of statutory audit fee was earned outside the UK
18. 0.4m of non-audit fees were paid overseas
19. 0.8m of the audit fee was paid to other auditors (2002:1m)
20. A further 0.5m was paid to PwC by Telereal, a joint venture with The William Pears Group
21. 0.5m of the audit fee was paid overseas
22. Company merged with Carnival on 8 January 2003. Now called Carnival plc
23. 2m of non-audit fees were paid overseas
24. 784,000 of fees relating to the acquisition of Yes Car Credit were capitalised
25. 4.9m of total fees relate to UK work
26. 0.7m of non-audit fees were earned within the UK
27. 0.9m of audit fee and 8.3m of non-audit fees were paid in the UK
28. 1.2m of audit fee were paid overseas
29. An additional 0.2m of audit fees were paid to other auditors
30. 0.8m of non-audit fees were paid overseas
31. 1.6m of non-audit fees were paid overseas
32. 2.3m of non-audit fees were paid in the UK
33. Six Continents demerged in April 2003 into two FTSE 100 groups, the Intercontinental Hotels Group and Mitchells & Butlers. Both are audited by E&Y
34. 1.9m of non-audit fees were paid overseas
35. An additional 0.7m in non-audit fees were paid to other firms
• Survey research and reporting by Liz Fisher.