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KPMG’s UK Audit Department Chair has been appointed as an independent director of Minor BHP, a recent client who has paid the company hundreds of millions of dollars over the last two decades.
Michelle Hincliffe, a member of the company’s UK Board of Directors, will retire in February to join the British-Australian company and join the Risk and Audit Committee.
Between 2003 and 2019, KPMG member firms in Australia and other countries paid $ 293 million for auditing financial statements and $ 64 million for other advice, according to BHP’s annual report. I did. EY has replaced KPMG as an auditor since July 2019 under the Rotation Regulations.
Hincliffe’s move prompted questions from accountants and investors about both KPMG’s independence as an auditor and whether she could truly become independent as a BHP board member.
she Since being appointed Audit & Supervisory Board Member in 2003, BHP will be the third former KPMG executive to become a board member. Former Chairman of KPMG Australia, David Crawford, was BHP Director from 2001 to 2014, and former CEO Lindsay Maxsted has been on the Board since 2011. Until 2020.
BHP Chair Ken Mackenzie said Thursday: “Michelle’s extensive experience in financial risk management and her broad international perspective will further strengthen BHP’s board of directors and complement the expertise of existing directors. “.
A senior auditor at another accounting firm said the Hincliffe move was “technically compliant” during the two-year cooling-off period of the UK auditor who joined the previous client, but such an appointment was “technically compliant.” It always smells. ”
The BHP audit was led by KPMG Australia, where Hincliffe was a board member until 2015. KPMGUK said Hincliffe has never worked on a BHP audit.
However, she was responsible for KPMG’s UK audit operations from 2017 to 2019, and then chaired the department, overseeing the team working on the UK part of the audit, people familiar with the structure of the company said. I am.
After a series of scandals in the industry, UK auditors want to improve their independence by limiting the sale of consulting advice to auditing companies and ring fencing auditing capabilities from other business units. We are taking measures.
According to corporate governance experts from BHP’s top 30 shareholders, the appointment of Hincliffe also raises questions about her independence as a non-executive director.
Under the UK Corporate Governance Code, the independence of non-executive directors can be compromised if they have had significant business relationships with the company in the last three years. KPMG last approved the BHP account in September 2019.
This code applies to premium listed companies in the UK, but if shareholders plan to consolidate their dual corporate structure, BHP will leave the FTSE 100 and move to a standard listing. Shift listings on major stock markets To Australia.
Governance experts said the issue of independence “results in perception, which is subjective and a matter of opinion.”
Another top 30 shareholder corporate governance expert said the appointment was “not ideal,” but added that “probably not a major issue at this stage.”
Hinchliffe’s departure will bring further cataclysms to KPMG’s board of directors. Fight a series of regulatory investigations And adapt to the next leadership shakeup Bill Michael’s resignation As chair and chief executive officer for comments on staff video calls in February.
Chair of KPMG UK’s audit division to join board of ex-client BHP Source link Chair of KPMG UK’s audit division to join board of ex-client BHP