BT replace PwC with KPMG after Italian scandal

KPMG has replaced PwC as auditor of BT, ending PwC’s 33-year association with the telecoms giant.

BT’s review of its accounting practices was prompted by a scandal in its Italian division after a whistleblower exposed fraud at BT Italia, triggering a £530m write-off and wiping a fifth off the telecoms group’s market value in January.

The changing of the financial guard at BT also comes as PwC suffered a further blow as it was replaced by another ‘Big Four’ rival, this time Deloitte, at FTSE 250 oil and gas specialist Hunting plc, bringing down the curtain on that partnership after a 28-year tenure.

KPMG, which was formerly chaired by BT’s current chairman, Sir Michael Rake, beat EY to win the BT contract, which was reportedly worth £14.9m last year.

Deloitte, the other member of the so-called big four accounting groups, was unable to bid because of a potential conflict with other work it already does for BT, they added.

“BT, KPMG and PwC will commence transition planning immediately to ensure a smooth and effective migration during 2017/18,” BT said.

A statement from KPMG added: “BT’s Audit & Risk Committee met and reviewed both written and oral proposals from the bidders, recommending KPMG after careful consideration against a defined set of key criteria. BT noted that quality of audit was a priority and felt KPMG’s offered the best overall fit against BT’s criteria.”

Bill Michael, senior partner elect at KPMG in the UK said: “We are delighted to have been selected to audit BT, adding to our recent appointments at fellow FTSE 100 companies Reckitt Benckiser and Micro Focus to strengthen our position as the largest auditor of listed companies overall. We believe this latest win is testament to our people and our commitment to audit quality which continues to be a key priority for audit committees, the investor community, regulators, the profession and society as a whole.”

Alex Holt, global head of telecoms and media at KPMG in the UK said: “We are delighted to have been selected by the BT Board as their next auditor. We look forward to working with them at a critical point for BT, set against a backdrop of unparalleled industry transformation.”

Meanwhile, PwC will remain oil and gas group Hunting’s auditors for the financial year ending 31 December.

According to Hunting’s 2016 annual report and accounts, PwC was paid £1.8m for audit work, slightly below the 2015 figure of £2.1m.

John Nicholas, chairman of Hunting PLC’s audit committee, said: “We would like to thank PricewaterhouseCoopers for their significant contribution as auditors of the group since the company’s formation in 1989. We look forward, in due course, to working with Deloitte.”