Jessica Fino 12 May 2017 11:24am

BT looking for new auditor after 33 years with PwC

The telecommunications company has announced its intention to find new auditors next year, ending its 33-year relationship with PwC

The decision follows the accounting scandal in Italy which saw the company’s market value dive almost 20%.

In its annual report published on Thursday, the company announced the board has initiated a tender process with a view to appointing new auditors for the 2018/2019 financial year.

PwC has been BT’s auditor since 1984.

“We expect the audit tender process to be completed by the time of the annual general meeting (AGM) in July, to enable an effective transition by the selected audit firm during 2017/18,” it said.

A resolution proposing the appointment of the successful firm will be put to shareholders at the 2018 AGM.

The results of an independent review by KPMG, which discovered that historical accounting errors identified in BT’s Italian business would cost the business up to £530m, nearly £400m higher than an internal investigation in October estimated, could merit the acceleration of the audit tender process given the scale of the scandal.

BT said the review revealed, “the extent and complexity of inappropriate behaviour in the Italian business were far greater than previously identified and have revealed improper accounting practices and a complex set of improper sales, purchase, factoring and leasing transactions”.

PwC could not provide any comment.

The company also announced in its financial report that it would be cutting its chief executive’s pay by £4m as well as slashing 4,000 jobs in a bid to reduce costs.

BT said its chief executive Gaving Patterson and its outgoing finance director Tony Chanmugam will not be receiving a bonus for the 2016/17 financial year.

Patterson saw his package cut from £5.28m last year to £1.34m this year, while Chanmungam will receive 258,000 before he retires instead of the £2.8m received a year earlier.

Tony Ball, chairman of the remuneration committee, said, “The past year has been challenging.

"Although good progress has been made in a number of areas, unfortunately our performance has been significantly affected by the accounting irregularities in our Italian business, the issues that arose in Openreach around deemed consent and the significant challenges we faced in the UK public sector and international corporate markets.

“The committee has made a number of difficult decisions this year in light of these circumstances and exercised its discretion accordingly.”

It also emerged on Friday that Dave Lewis, the chief executive of Tesco, will take a 10% pay cut this year despite the supermarket reporting an increase in sales for the first time in seven years. The boss received £4.1m in 2016/2017, down from £4.6m an year earlier.