PwC loses third major retailer this year as John Lewis switches

John LewisDepartment store chain John Lewis has ditched accountants PwC.

The retail partnership, which owns Waitrose food stores in addition to its John Lewis outlets, has selected KPMG for the role, in line with a newly adopted policy of putting its audit out to tender every five years.

The news comes less than a month after fellow retailer Tesco confirmed that it had dropped the big four firm and Sainsbury’s, likewise, after making the move in January.

PricewaterhouseCoopers had done John Lewis’ books for 20 years.

Tesco, Britain’s biggest grocer by market share, was with PwC for 32 years before new Chairman John Allan opted for a divorce in May, just as Tesco reported a record-breaking £6.4bn loss in April.

Sainsbury’s, meanwhile, replaced PwC with Ernst Young in the wake of the investigation that accounting watchdog The Financial Council is carrying out on the firm in relation to the £263m profit overstatement scandal Tesco faced towards the end of 2014.

In its Annual Report and Accounts for the year ended 31 January 2015, the Partnership noted that it had initiated an audit tender process for the 2016/17 financial year, in line with good governance practice.

Baroness Hogg
Baroness Hogg

The Chair of John Lewis’s audit and risk committee, Baroness Hogg, said: “We thank PricewaterhouseCoopers for their strong contribution as the Partnership’s auditors over many years and for this coming year. We look forward to working with KPMG or the 2016/17 financial year”.

Last year, PwC earned £800,000 for auditing John Lewis’s books, plus an additional £300,000 for non-audit consultancy work.

Under new European standards intended to prise open the rarefied world of large corporate audits, multinational corporations are supposed to put contracts out to tender at least once a decade.

In the FTSE 100 index, audit work is dominated by the ‘Big Four’ accountants. As of last month, PwC had 39 blue-chip audits, KPMG had 26, Deloitte had 20 and EY had 13. The only outsiders were BDO and Grant Thornton, which had one each.

Other members of John Lewis’s audit committee include Keith Williams, the chief executive of British Airways, and Denis Hennequin, a former senior executive at Accor, the French hotels company.

John Lewis announced annual profits this year of £343 million, down 7 per cent, hit by the impact of a supermarket price war on Waitrose’s earnings.

The fall prompted an 11 per cent cut in staff bonuses distributed to the organisation’s 90,000 partners.

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