Shareholder revolt call over non-audit fees

The Pensions Investment Research Council raised concerns about non-audit fees paid to PricewaterhouseCoopers connected with its audit of Sage, and fees paid to Deloitte in connection with its audit of Paragon.

The moves came as a new report also indicated that UK firms may run greater conflicts of interest than their European counterparts.

PIRC has recommended that shareholders abstain from the vote on the re-appointment of Sage auditors, PwC, which earned £1.3m in non-audit fees from the technology giant, and £1.5m for the audit.

Paragon’s auditors Deloitte carried out £140,000 in non-audit work, equivalent to 34% of the statutory audit fee of £410,000.

‘These factors raise concerns about the independence of the auditors. PIRC would welcome more specific information about the audit committee’s activities during the year under review, in particular as to how the committee ensured the objectivity of the auditors’ opinion given the level of non-audit fees,’ PIRC said of Paragon.

A new report by Company Reporting separately raised concerns about the issue this week.

The company highlighted 33 instances where European companies had paid more in non-audit fees than they had to have their books signed off ­ 70% of these companies were UK listed.

Examples of high non-audit fee levels included that of Alliance & Leicester, which had paid £2.3m, or 66% of its total audit fees, to Deloitte for tax services in relation to a business disposal.

‘The findings indicate companies in our sample, and those based in the UK in particular, contribute significant revenues to audit firms for non-audit services compared to the amount charged for audit purposes,’ the report said.

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