Unilever, the consumer goods giant, has reappointed PricewaterhouseCoopers as its auditor despite the accounting firm's decision to raise its fees.
Unilever, which took an early stance on issues of corporate governance by barring auditors from consulting contracts, indicated that it would not be receptive to higher charges when the audit was put out to tender in July.
Speaking at the time, chairman Niall FitzGerald said: “It would be a very brave auditor who began to seek to develop a case that, despite saying there was no flow between consulting and audit, they now needed to raise audit fees.”
His comments came soon after it emerged that Andersen had won vast consulting contracts from its audit client Enron. The revelation called the integrity of the audit into question amid concerns that it was merely a loss-leader used to access lucrative consulting work.
Most accounting firms have since sold their consulting divisions and indicated fees will increase. PwC's global chief executive Samuel DiPiazza has even suggested the firm would “walk away from” clients that did not accept higher charges.
The firms argue that better remuneration will safeguard the quality of the audit. “We have to ensure we get a proper fee for a proper audit,” Mike Rake, chairman of KPMG UK, has said.
PwC has audited Unilever since 1987 and July's tender was the first for a decade. Unilever claims the total audit fee, which was Eu16m (£10m) in 2001, will fall as the integration of various acquisitions is completed and the workload reduced. It would not comment on the charges for comparative work.
Rudy Markham, Unilever's finance director, said: “We recognise that audit companies will need to satisfy themselves of their capability to attract people to do a quality audit.
“If individual firms do decide that the impact of this will be to review their fee base, then that is up to them. However, we do not expect any significant impact on Unilever's audit fee structure.”
PwC's reappointment is subject to shareholder approval. The firm does not comment on client matters.