Santander reported yesterday to the Spanish securities regulator, Comisión Nacional de Mercado de Valores (CNMV), that its auditor will be PwC from fiscal year 2016 until 2018.
Deloitte, the bank’s statutory auditor since 2002, will continue the work for fiscal year 2015. Santander informed the CNMV that the change follows good governance recommendations on audit rotation.
After 13 years auditing Santander’s financial statements, Deloitte has already exceeded the period when, according to best practice, the audit contract should go out to tender to safeguard the independence and professional scepticism.
For example, the Competition and Markets Authority (CMA), a non-ministerial department of the UK government, published in October 2014 an order that requires mandatory retendering for FTSE 350 companies every 10 years.
Other banks could follow suit soon on Santander’s or Barclays’ move, which recently ended its 100-year long contract with PwC to appoint KPMG as auditor.
The change of the auditor might challenge Deloitte’s top spot in Spain’s accounting firm rankings.
Deloitte reported revenues worth €551m ($608m) in the year to May 2014, followed by PwC with €518m, according to The Accountant’s sister title International Accounting Bulletin.
Deloitte earned €44.2m in audit fees in the same fiscal year, according to Spanish newspaper El Pais.
The change of audit firms at Spain’s top bank, coincided with a release issued by the Corporation of Auditors of the General Council of Economists (known as REA+REGA), where the professional body reiterated its concerns over the implementation of the EU audit reform in Spain.
According to REA+REGA, the bill currently being discussed at the national parliament isolates the Spanish market from the rest of the EU, stipulating unnecessary requirements which would have the effect of increasing audit fees.
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