BT is eager to put its audit out for tender but its choices are limited

 
Oliver Gill
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BT revealed a £530m accounting black hole in its Italian division in January (Source: Getty)

BT is trying to find a new auditor as soon as possible following revelations of a £530m accounting scandal in its Italian arm, according to reports.

The telecoms giant is desperate to ditch PwC but is being hamstrung by rules dictating a slower process, Sky News has reported.

The chair of BT's audit committee, Nick Rose, has written to the Financial Reporting Council (FRC) asking for their assistance in expediting the process to replace PwC.

Read more: Watchdog Ofcom slaps BT with largest fine in UK telecoms history

Reports suggested the FTSE 100 firm has lost confidence in PwC after suffering two large accounting problems in its Global Services division in the last 10 years.

The problem facing BT is finding a beancounter that is independent of the firm. Usually a cooling off period of around 18 months is required so the new accountant can finish any non-audit services it is undertaking and leave a sufficient gaps so it is not auditing its own work.

Usually, FTSE 100 firms such as BT will need a Big 4 accountant to undertake its statutory audit. This is not simply for reputational reasons, it is often dictated in certain contracts such as financing agreements with lenders.

Deloitte is conducting an extensive piece of work for BT that will take it out of the running if the audit were put up for tender immediately, sources told Sky News.

This leaves KPMG and EY as the only potential candidates.

Read more: More KPMG partners are following Richard Fleming to Alvarez & Marsal

It was widely expected that BT would look to change auditors in the next few years in order to comply with audit rotations rules. PwC has been the auditor of BT since 1984.

BT, the FRC and PwC declined to comment on the reports.

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