Vodafone replaced its auditor for the first time since listing on the London Stock Exchange in 1991 amid a broad shake-up of the European accountancy market.

The mobile phone company said it would drop Deloitte and replace it with its rival PwC following the completion of the audit for the year ending March 2014.

The lucrative contract earned Deloitte £9m in audit and audit-related fees in 2013 alone. The switch follows new guidelines in the UK from the Financial Reporting Council that require FTSE 350 companies to put their audit out to tender every 10 years.

Since those changes took force in October 2012 some 33 FTSE 350 companies have put their audits out to tender, with 20 of the processes resulting in a change of audit firm. PwC expects at least 50 FTSE 350 companies to tender their audits this year alone.

Among the major UK companies that have swapped auditors in recent months are Marks and Spencer, British Land, and HSBC. In December one of the most valuable contracts changed hands as Unilever ended its 26-year relationship with PwC and replaced it with KPMG.

The rules governing auditors are set to be toughened further when new EU laws come into place requiring listed European companies to rotate auditors every 10 years, with a possible 10-year extension if they put the contract out to tender.

The new regime is meant to raise auditing standards and sever the overly cosy relationships that can develop between firms and their clients over the course of decades.

But while the new EU rotation regime is meant to inject greater competition into the audit market, many experts suspect it will just create a merry-go-round between the Big Four incumbents, which dominate the global accountancy market.

(Source : Financial Times)