Big firms facing auditor backlash

BRITAIN'S biggest companies are heading for a clash with major shareholders over the role that auditors play and how often they are changed.

In the aftermath of the Enron scandal, investor groups such as the National Association of Pension Funds, which speaks for about a third of UK shares, may urge shareholders to insist that companies appoint new auditors at least every five years.

They are also looking at whether the consultancy money that auditors earn should be pegged. The average FTSE 100 company pays its auditor three times more in consultancy fees than for audit work.

Shareholder advisory group Pirc and the Co-operative Insurance Society last week went on the offensive over Airtours' retention of Arthur Andersen, the auditor involved in the Enron scandal.

In a Financial Mail survey of top firms last week, three - airports operator BAA, AstraZeneca, the pharmaceuticals company, and home shopping group GUS - said their view of auditors had changed in the light of Enron.

But only BAA and AstraZeneca said they would now consider a change. Of the 41 companies in the survey, 38 said they had no concerns about their auditors.