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Rentokil Initial sent tremors through the accounting world today as it changed auditors in a move which will save it more than £1 million a year.
Chief executive Alan Brown, who is part of the former ICI management team brought in to turn Rentokil around, said the decision was based on his time as finance director of the chemicals giant.
“That was when the whole thing of separate internal and external audits and Sarbanes Oxley and Turnbull were all coming in, said Brown.
“The exponential confusion of having so many people, some of whom were virtually doing the same job, really got to me. ICI's auditors, KPMG, and I managed to come up with a far more simplified and less expensive way of doing things,” he said.
KPMG again approached Brown at Rentokil with a similar streamlined system. Existing external auditors PricewaterhouseCoopers were asked to pitch a rival scheme but KPMG won the beauty parade. As a result Deloitte loses its position as internal auditor and Brown reckons his audit bill drops from £4.8 million to £3.4 million a year.
That's significant for a company which saw pre-tax profits fall 55% to £8.2 million in the first six months of the year. Brown said conditions in all its markets — pest control, washrooms and couriers —remained tough, but his team was cutting costs faster than expected. He predicted profit growth in the second half.
