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Spar fired Deloitte & Touche as the company’s auditor this week following pressure from up to four of the retailer’s major shareholders, Spar chief executive Graham O’Connor said this week.
“Some of our major shareholders wanted that change. So that they said that although the mandatory rotation has come in they wanted the change. So we obliged and said if you want that – that’s what we’ll do. So we changed from Deloitte to PricewaterhouseCoopers (PwC),” he told City Press.
“All the big four especially – they are strong in terms of ethics and the way they operate. So it is a bit of a pain for us to change but we are very confident about the PwC picking going forward. The fact that Deloitte had been with us for 50 years was a bit long actually, so we needed to change anyway,” O’Connor said.
Regarding familiarity that results from long-term, entrenched business relationships, O’Connor said that familiarity didn’t exist because of auditor’s ‘integrity, ethics and their culture’.
“Someone worth their salt would say that that isn’t the right thing to do. I don’t subscribe to an adversarial relationship. Auditors must do their job and they must question all the elements that come into play and we must do likewise.”
“There were three or four major shareholders that requested the change.”
“The company initiated this change as a result of the adoption of an audit firm rotation process,” Spar said in a note this week.
The Independent Regulatory Board for Auditors has introduced a new requirement: that external auditors be rotated every 10 years. Mandatory audit firm rotation will come into force from April 2023.
According to Spar’s last annual report, the company’s major shareholders are: the Public Investment Corporation (PIC), which manages the funds including those of government employees and has a 13.22% stake, US company Oppenheimer Funds (8.76%) and Coronation Fund Managers (6.03%).
Deon Botha, PIC head of corporate affairs, said in response to e-mailed questions regarding the change to Spar’s external auditor:
“The PIC’s environmental, social and governance listed policy requires that the audit partners should rotate in line with JSE regulations. In order to ensure external auditor independence, the PIC recommends that companies should at least every ten years put their external auditor contract out for tender. Details of such tender procedure should be included in the integrated report to ensure that the appointment of the external auditors happens in a transparent way. The PIC has requested Spar to rotate its external auditor.”
Oppenheimer Funds spokesperson Natalie Marin said in response to questions about the company’s stake in Spar: “We don’t typically comment on individual holdings”.
Louise Pelser, Coronation Asset Management spokesperson, didn’t respond to an e-mail asking questions about whether Coronation had pushed for a change in Spar’s external auditor
At Spar’s annual general meeting in early February this year, almost 36 percent of shareholders voted against the reappointment of Deloitte as the company’s auditor.
The reappointment of an external auditor requires 50 percent shareholder approval.
