Scisys trades one Big Four auditor for another
AIM-listed software company Scisys has appointed EY as its auditor after the resignation of KPMG from the role. The move comes as a competition probe looms on the horizon for the UK’s largest accounting and advisory firms, with the Big Four in particular standing accused of holding a disproportionately large share of the market.
Launched in 1980, Scisys describes itself as a supplier of bespoke software systems and support services to the media & broadcast, space, government, defence and commercial sectors. The pan-European computer software and services company is based in the United Kingdom and Germany, and posted turnover of more than £50 million in 2017, with offices across Europe.
The firm has been working to prepare for an uncertain 2019, due to that continental heritage, however. Earlier in October, the firm announced it would be relocating its UK wing to Ireland as part of Brexit contingency plans. The move will see a new group holding company created, incorporated in the Republic, and listed on both London's AIM market and Dublin's Euronext. Pending a shareholder vote, Scisys said a relocation to the European Union will allow it to meet residency requirements for EU grants and allow it to keep contributing to the space programmes funded by the European and UK space agencies.
As the company looks ahead, it has wrought more changes in terms of its accounting needs, meanwhile. In a statement to the London Stock Exchange, Scisys said Big Four firm KPMG had resigned as its auditor. While KPMG has suffered a troubled 2018, amid a spate of auditing scandals, according to that statement, there are “no matters connected with it ceasing to hold office that need to be brought to the attention of members or creditors of the company for the purposes of section 519 of the Companies Act 2006.”
Big Four rival EY is set to take over the auditing role with immediate effect. While it is common for Big Four firms to replace one another when it comes to large auditing contracts, the switch comes at a delicate time, when the domination of the market by the quartet is under intense scrutiny in the UK.
Earlier in the year, the UK’s fifth largest accounting and advisory firm Grant Thornton withdrew from bidding for FTSE 350 audit tenders, which it claimed cost the firm as much as £300,000 an attempt, while rarely yielding a new contract. The move sparked multiple calls for a competition probe, with critics suggesting the Big Four’s stranglehold was compromising the integrity of the auditing industry. The Competition & Markets Authority has since announced it will carry out an investigation on these grounds.
