FTSE 100 listed global mining conglomerate BHP has ended its 23-year audit relationship with KPMG, hiring fellow Big Four giant EY, according to Accountancy Daily.
BHP, formerly known as BHP Billiton, announced that it would be changing auditors two years ago due to the changes to UK audit rules which impose a 20-year limit on audit tenures, other than in exceptional circumstances, and would have forced the group to change auditor by 1 July 2023 at the latest.
One of the factors influencing the decision to switch auditors via tender in 2017 was as the lead audit partner at KPMG was due to rotate this year so it made sense to time the audit switch at the same time to reduce disruption.
As the incumbent, KPMG did not take part in the tender process.
The mining giant had been audited by KPMG for 20 plus years since 1996, one of the longest audit relationships left on the FTSE 100 now tough audit rules require listed entities to regularly review and tender their audit business.
KPMG’s appointment as external auditor came to an end on completion of its procedures on BHP’s Consolidated Financial Statements for the financial year ending 30 June 2019 and the filing of the related Form-20F.
KPMG had been BHP auditor since 1996 and was paid a total of £12m in the last financial year, including £7.69m for audit fees, £3.37m in audit related fees, plus a further £935,000 for non-audit services for year end 30 June 2019.
In a statement, BHP said it was changing auditors ‘in accordance with ASX Listing Rule 3.16.3’, adding that ‘the appointment follows the resignation of KPMG due to UK and EU requirements on auditor tenure’.
The 2019 annual report noted that the Australian audit engagement partner was appointed at the start of FY2015, while the UK audit engagement partner took formal responsibility at the start of FY2018 following a transition period. It also confirmed at the time that audit engagement partners were appointed in Australia and the UK to represent EY for commencement from 1 July 2019.
EY officially took over as external auditor from 7 November 2019 and will audit the next set of accounts for year end June 2020.