MIDDLE CLASS shoppers’ favourite, John Lewis, has booted out PwC as its auditor, bringing to an end a 20-year relationship with the Big Four firm and has appointed arch rival KPMG in its place.
The decision by the employee-owned national chain of department stores, and owner of upmarket supermarket group, Waitrose, was made as new regulations compelling organisations to put their audits out to tender on a five yearly basis, kicks in.
The audit, worth £800,000 a year last year and £300,000 in non-audit related fees, is the latest supermarket account to be lost by PwC, after it departed the Tesco account in the wake of the £263m accounting scandal which emerged last year. PwC is currently under investigation for its role in the Tesco profits overstatement debacle.
Sainsbury’s, another go-to shopping destination of the middle classes – cut PwC as its auditor in January this year – ending another 20-year relationship when the grocer announced it was appointing EY to take over the role in 2016.
Tesco brought to an end its 32 years with PwC as auditor when it appointed Deloitte as replacement in May.
Deloitte was brought in by the grocer to conduct an independent probe into the accounting scandal of its overstated half-yearly results. It soon confirmed that the black hole was even bigger than the £250m previously declared and went back even further than the supermarket group had originally stated.
At the time, a PwC spokesman said: “We mutually agreed with Tesco that we would not take part in the tender process and will stand down as the company’s auditors after the conclusion of the 2015 AGM.”
While PwC had identified its concerns over Tesco’s recording of its commercial income in its annual report, it took an internal whistleblower to alert the board to the sheer scale of the problem.
The scandal led to a number of probes from the Serious Fraud Office, accounting and audit watchdog, the FRC and the Groceries Code Adjudicator.
Just last week, the UK’s audit and reporting watchdog is to scrutinise the relationship between retailers and suppliers following the Tesco accounting scandal in which the retailer overstated its first half profits by £250m.
The FRC, which has already launched an investigation into Tesco’s accounts after the supermarket giant misstated payments from suppliers, said it plans to make the retail sector a priority sector for audit inspections this year.
PwC still audits the accounts of the WM Morrisons grocery empire. KPMG is set to begin its audit role at John Lewis in 2016.
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