Barclays replace PwC as auditors after 120 years

BARCLAYS is set to engage a new auditor, severing ties with PwC, the Big Four firm that diligently scrutinized the financial records of Britain’s second-largest bank for over a century.

Competitors of PwC now have the opportunity to vie for the privilege of auditing Barclays’ financial records, a prospect unfolding as early as the upcoming year. PwC, however, will not be included in the selection process, a strategic move by the bank to proactively address EU and UK regulations designed to foster competition within the audit market.

The revelation of the decision to replace PwC, Barclays' steadfast auditor since 1896, was unveiled in the bank’s annual report. The report outlined the initiation of the tender process, anticipated to commence either in 2015 or 2016, with a focus on the audit for the fiscal years 2017 or 2018.

PwC finds itself being supplanted by the bank, a move necessitated by compliance with EU directives mandating auditors' replacement every two decades. Concurrently, the UK Competition Commission is enacting regulations imposing a ten-year ceiling on audit tenures.

Barclays, as indicated in its annual report, acknowledged the possibility of initiating the tender process earlier—potentially this year. The Financial Reporting Council's transitional guidelines, if applied to Barclays, would suggest a tender for the 2015 audit. However, the audit committee expressed heightened awareness of the substantial organizational shifts, particularly within the finance function, resulting from the bank's transformation program. The committee cited the "additional strain" associated with an audit tender and a change of auditing firm as contributing factors to the delayed decision.

Furthermore, the audit committee pointed out the recent appointments of both the group finance director, Tushar Morzaria, and audit committee chairman, Mike Ashley, the latter having previously served as a partner at KPMG.

PwC’s auditing efforts at the bank have been subject to scrutiny by the UK’s accounting watchdog. In December, the Financial Reporting Council concluded its investigation into PwC’s conduct as auditors of Barclays Capital Securities. The council deemed it improbable that a tribunal against the firm would succeed. Initiated in 2011, the investigation focused on PwC’s role regarding the preparation of reports to the FSA regarding Barclays Capital Securities’ compliance with the FSA’s Client Asset Rules from December 1, 2001, to December 29, 2009.

PwC received £44 million last year from Barclays for its combined audit and non-audit services on behalf of the bank.