The Smurfit packaging group has ended its multimillion audit contract with Ernst & Young following its merger last December with the Dutch group Kappa Packaging, writes Arthur Beesley, Senior Business Correspondent
Kappa's auditor PricewaterhouseCoopers (PwC) has been selected to audit the merged Smurfit-Kappa group, a move that brings Ernst & Young's audit business for Smurfit to an end after some 60 years.
The change took effect at the end of May, according to a notice to the Securities & Exchange Commission (SEC) in the US.
The Smurfit contract was among the largest and most prestigious held by Ernst & Young's Irish unit.
The company is also auditor to CRH, Iona Technologies, Anglo Irish Bank, the Educational Building Society and Bord Gáis Éireann.
Ernst & Young's Dublin office and its offices in international locations where Smurfit has operations received a total of €4.7 million in respect of its audit work for the Irish group last year.
This included fee income for the month of December, when the merger with Kappa took effect.
Smurfit-Kappa's combined audit contract with PwC is estimated to be worth in excess of €5.2 million per annum.
A spokesman for Ernst & Young acknowledged the loss of the contract but said the firm would continue to do non-audit work for Smurfit-Kappa.
A spokesman for PwC said the firm did not discuss client affairs.
Smurfit-Kappa said in the SEC notice that PwC will audit the group for the 2006 fiscal year. The notice said that the merger resulted in Smurfit-Kappa being audited by two companies.
"In order to streamline the audit of the group, following a request for a proposal, the board of directors of the group has approved the appointment of PwC as the independent registered public accounting firm to the group and accepted the resignation of Ernst & Young as independent registered public accounting firm to the group," it said.
The notice went on to say that Ernst & Young's reports on the company in the past two years did not contain an adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope or accounting principles.
"During the past two fiscal years . . . there were no disagreements with Ernst & Young on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure which, if not resolved to Ernst & Young's satisfaction, would have caused Ernst & Young to make reference to the subject matter of the disagreement(s) in connection with its reports on the company's consolidated financial statements in such years."
