KPMG wins RM audit contract and a licence to practise law

[TrueBlueTerrier]

KPMG wins Royal Mail audit contract and a licence to practise law

http://www.telegraph.co.uk/finance/news ... e-law.html" onclick="window.open(this.href);return false;

KPMG has been awarded the audit contract for Royal Mail, ending a 27-year relationship between the newly-privatised postal company and its EY, its current auditor.

Royal Mail started looking for a new auditor in January, the first time it has invited pitches since EY took on the role in 1986. The firm is expected to bring in KPMG after its annual meeting next summer.

EY was paid nearly £2m for last year’s audit of Royal Mail and its subsidiaries, as well as a £4m fee for assisting with the privatisation.

"EY will continue in its current role as Royal Mail’s independent auditor until the end of the 2015 AGM, during which time it will complete the audit of the 2014-15 accounts. EY will work closely with KPMG to ensure a smooth transition," said Royal Mail in a statement.

In July, KPMG won the audit mandate for medical technology firm Smith & Nephew, severing a 77-year relationship with EY, which was formerly known as Ernst & Young. KPMG has picked up Unilever's audit contract but lost its work with Vodafone as blue-chip companies react to new rules requiring firms to regularly review their audit relationships.

The Royal Mail win comes as KPMG confirmed it will expand its legal services after winning an alternative business structure (ABS) licence from the Solicitors’ Regulation Authority.

Gary Harley, the KPMG partner responsible for rolling out the expanded services, said the firm’s 50-strong legal team is already on track to generate £10m of revenues this year.

“We are in recruitment mode: we have already hired a number of extremely highly regarded lawyers and we continue to attract exceptionally high quality candidates as we add to our team,” he said in a statement.

The company and its Big Four competitors EY, Deloitte and PwC are diversifying away from their accountancy heartland into areas including technology investment funds, cloud computing and strategic advice.

PwC won an ABS licence at the start of the year, allowing it to directly own PwC Legal, which has more than 200 fee-earning lawyers in the UK. EY has recently hired several legal partners, while Deloitte said last month that it would not follow suit and apply for an ABS licence.

The accountancy trade body ICAEW also announced today that it has awarded its first ABS licence to the accountancy firm Kingston Smith. The ICAEW said it expects 250 firms to apply for licences for probate work, after it was granted the power to grant licences in July.