Unilever to ditch PwC after 26 years to comply with new UK auditor rule

By Huw Jones

LONDON, July 26 (Reuters) - Unilever is looking for a newauditor, after 26 years with PwC, to comply with a new rule,prompted by questions over why accountants gave banks a cleanbill of health just weeks before they were rescued by taxpayersin the 2008 financial crisis.

Britain's Financial Reporting Council (FRC) said last yearthat companies should consider changing their auditor at leastevery decade in order to end cosy long-term relationships.

Only a few blue-chip companies have taken any action so far.

HSBC, a KPMG client since 1991, has said it willput the work out to tender - the only bank to do so.

Barclays has yet to consider a tender, having usedPriceWaterhouseCoopers (PwC) for the past century, Royal Bank ofScotland has been with Deloitte since 2000, and PwC hasaudited Lloyds' books for about 140 years.

Asset manager Schroders has just retendered but hadto stay with PwC after discovering that appointing KPMG wouldbreach conflict of interest rules. KPMG has also just replacedDeloitte as auditor for insurer RSA.

Change is costly and time-consuming and used to occur only because of disagreements between auditor and client.

A UK Competition Commission investigation found that almosta third of top 100 companies have had the same auditor for morethan two decades. The "Big Four" - PwC, KPMG, Deloitte and Ernst& Young - audit most of the top firms.

"To maintain Unilever's position at the forefront of goodgovernance, we have decided to put our statutory audit work outto tender with the intention of nominating a new externalauditor for 2014," Unilever Chief Financial Officer Jean-MarcHuët said in a statement.

Melanie McLaren, the FRC's executive director for codes andstandards, said the rule was beginning to prove itself and willurge the Competition Commission to hold off for the time being.

But the Competition Commission proposed on Monday that topcompanies should put their book-keeping work out to tender everyfive years, a significant hardening of the FRC initiative.

And the European Union is approving a draft law that islikely to go further and force an actual change in auditor.

Another criticism is that some companies are so big thattendering will see the Big Four swapping customers rather thangiving smaller auditors a chance to have a piece of the pie.