By Mark Kleinman, City Editor
The London Stock Exchange's (LSE's) parent company is to review its long-standing audit relationship just days after competition authorities backed away from enforcing mandatory rotation of accounting ties.
Sky News understands that the LSE has put PricewaterhouseCoopers (PwC), its auditor since the 1990s, on notice that it may appoint one of its rivals to oversee the lucrative work.
The news represents part of a double-blow to PwC, which was notified today by Unilever, the Anglo-Dutch consumer goods producer, that it plans to hire another auditor.
Jean-Marc Huet, the company's chief financial officer, said: "Our business is very large in scale and reach, with operations in over a hundred countries.
"The challenge that this poses for our auditors has been successfully met by PricewaterhouseCoopers over many years and we have always been impressed with the rigour and quality of their audit.
"However, given changes in the regulatory environment and market expectations, it makes sense for Unilever to rotate its auditors at this time."
The reviews make Unilever and the LSE the first FTSE-100 companies to begin overhauling their audit relationships since the Competition Commission unveiled plans on Monday to make the accountancy market more competitive.
Critics will argue that since both the LSE and Unilever are likely to appoint one of PwC's principal rivals among the 'Big Four' - Deloitte, EY and KPMG being the other three - the market is simply likely to see greater rotation but no real new competition.
The Competition Commission said it wanted to see mandatory tendering for audit contracts every five years among the biggest 350 listed companies in the UK, which the accountancy firms have argued will lead to work of lower quality for their clients.
It also made recommendations about lifting restrictions on borrowing agreements in order to improve access to the FTSE-350 audit market for smaller firms, two of which - Baker Tilly and RSM Tenon - disclosed yesterday that they were in merger talks.
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