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Global gambling group Flutter Entertainment is tearing a 20-year relationship with accountancy KPMG to comply with EU rules and is switching to its Big Four rival, Deloitte, starting from 2024, The Times reported.
Merry-Go-Round among the Big Four
Irish-headquartered Flutter Entertainment was forced to undertake the switch due to EU listing rules which require listed companies to change their auditor after ten years. Flutter trades on the London Stock Exchange (LSE) and is a constituent of the FTSE100 Index.
The EU listing rules allow Flutter to retain the services of KPMG until the company’s 2024 financial year. The operator of Paddy Power and Betfair initially hired the services of KPMG back in 2002. In 2021, Flutter paid the accountancy firm £5.5 million ($6.72 million) to sign off its books.
The total amount KPMG gained from “one of the most lucrative assignments in Ireland,” as The Times refers to its contract with Flutter consisted of the fees paid by Flutter offices in Ireland, Britain, America, Australia, and other countries where the gambling group has operations. In Ireland, the amount paid was over £1.6 million ($1.95 million).
Digging deeper into the structure of the fees, The Times outlined just 6% of the total was generated from non-audit services but Flutter has a cap on “these services at 70% of what it pays for the audit.”
The rules introduced by the EU in 2014, which require public listed entities to change their audit firms after 10 years, resulted in a “merry-go-round for auditors” such as KPMG, Deloitte, PwC, and EY, as companies were forced to switch from one Big Four to accountancy to another.
Auditor’s Objectivity and Independence
According to the report, Flutter outlined that there was “no compelling reason” to replace its long-term auditor and the switch from KPMG to Deloitte was undertaken to ensure compliance with the EU listing rules.
Earlier in the month, Flutter Entertainment released its first-quarter earnings report and posted solid growth in revenue driven mainly by the company’s US operations where Flutter registered a 45% increase year-over-year.