SIG was under pressure to find a new auditor after shareholders revolted against the reappointment of Deloitte in May, with an overwhelming 78% rejecting the Big Four firm.
This came a few months after the company reported that it had suspended a number of individuals over profit exaggeration, which had been occuring for a number of years.
EY will begin as external auditors with immediate effect.
In its statement, SIG says it will extend its usual interim reporting timetable to accommodate the change, and will now report its half-year results ended 30 June 2018 on 21 September.
However, the appointment of EY further adds to concerns over the current state of competition in the UK-listed company audit market.
EY was reportedly the only legitimate Big Four candidate in the process, with KPMG ruled out as it conducts internal audit for the company and PwC, according to the Financial Times, has provided IT advice for SIG.
The UK’s sixth-largest firm, BDO, also competed in the tender process but was not appointed.
“We did pitch, we thought we had a good chance, and we put a very good team on it,” said Gervase MacGregor, head of advisory and a partner at BDO.
“We are very disappointed, but it won’t put us off pitching for other large listed companies,” he added.
In March, Grant Thornton announced a strategic decision to move away from tendering for statutory audit work in the FTSE 350 because of difficulty in penetrating this market.
At the time the firm said it would change its policy when it saw a “shift in the competitive landscape that would level the playing field for competing” in the market.
In May, Frank Field and Rachel Reeves, chairs of the joint committees investigating the Carillion Collapse, wrote to Tyrie urging him to initiate a review of the statutory audit market.
EY declined to comment and SIG has been contacted for comment.