BT replace auditor following Italian scandal

Man talks on phones while using a laptop

BT has seen fit to replace its auditor for the first time in 33 years, following a scandal at its Italian business which cost it £530m.

The phone powerhouse, which was previously owned by the state, will replace current firm PwC and replace them with rivals KPMG.

BT had earlier this year admitted that there had been an overstatement of profits, which caused the company’s shares to plummet.

At the time, KPMG was called in to stage an investigation into so called “inappropriate behaviour”.

BT said it wanted to “ensure a smooth and effective migration” and are aiming to move on from what has been a difficult year.

The BT Italia scandal first came to prominence after a whistleblower informed executives of the problems in 2016.

Subsequently, there was an investigation by KPMG which found “improper accounting practices and a complex set of improper sales, purchase, factoring and leasing transactions”, meaning that their profits had been overstated for a number of years.

BT disclosed last month that, following the fallout of the scandal, chief executive Gavin Patterson would see his pay fall from £5.28m to £1.34m.

There were also 4,000 lost jobs within the company, however a number of these were announced before the full scale of the scandal was known.

£8bn was lost from BT’s value, with share prices plummeting and remaining at a four-year low.

There have been new rules introduced to the stock market with a view to encouraging companies to regularly change their auditors to ensure accurate reporting and eliminate fraud.

Businesses in the FTSE 350 must now put their auditing contract out to tender every 10 years, although they only need to change them every 20 years.