Monday 28 October 2019 5:57 pm

M&C Saatchi set to appoint PwC as its auditor following accounting scandal

Advertising agency M&C Saatchi is set to appoint Big Four accountancy firm PwC as its new auditor following an accounting scandal that wiped out more than half of its share price.

In August the advertising agency network said it had set aside £6.4m after it had spotted an error in its accounts.

Its previous auditor KPMG, which first raised concerns about the group’s accounting controls in May, resigned amid the crisis.

Read more: Shares in M&C Saatchi plunge after it announces £6.4m charge following accounting errors

The appointment of PwC, which was first reported by the Financial Times, has not yet been confirmed by the company.

PwC had been separately appointed to conduct an independent investigation into M&C Saatchi’s accounting issues.

The independent review is being carried out by PwC’s forensic services group and is still ongoing.

PwC pushed back against suggestions of a conflict of interest between conducting the independent review and its potential role as the company’s auditor. 

Read more: M&C Saatchi warns on profits as accounting scandal drags on

The firm said in a statement: “We take our independence responsibilities extremely seriously and give careful consideration to matters such as these to satisfy ourselves we are independent before accepting a role as auditor. This includes satisfying ourselves that the nature of any prior work for a company will not give rise to a risk of reviewing our own work.” 

On its resignation, KPMG said in a letter to the agency’s board that it was “unable to agree a satisfactory commercial outcome for the 2018 audit to compensate KPMG for the additional work required over and above that originally planned”.

M&C Saatchi’s share price fell nearly 3.6 per cent today to 161p.