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KPMG has stepped down as the auditor of Alliance Pharma following a “breakdown of the relationship” between the Big Four firm and the group.
It comes as KPMG raised “concerns” regarding “aspects of the company’s approach to corporate governance relating to the preparation of the financial statements”.
The concerns related to the group’s financial statements for the year ended 31 December 2021, and the accounting treatment of a £7.9m fine that Alliance Pharma received from the CMA.
The international healthcare group has instead appointed Deloitte as its auditor for the financial year ending 31 December 2022, confirming that KPMG, its outgoing auditor of six years, did not participate in the tender process.
KPMG submitted a letter to Alliance outlining its reason for resigning, which stated: “The reason connected with our ceasing to hold office relate to concerns expressed to the board with regard to the aspects of the company’s approach to corporate governance relating to the preparation of the financial statements, which has ultimately resulted in a breakdown in our relationship.”
In a separate letter, Alliance Pharma’s chair of the Audit and Risk Committee, Richard Jones said: “The board believes it would be helpful to shareholders to provide further context to KPMG’s statement, which cites corporate governance concerns relating to the preparation of the group’s financial statements for the year ended 31 December 2021, notwithstanding the fact that the audit opinion in the 31 December 2021 financial statements was unqualified and did not disclose either any corporate governance concerns or any material errors in the financial statements.
“The board understands that KPMG’s statement refers to the process by which the committee, and subsequently the board, approved the accounting treatment in respect of the Competition and Markets Authority finding and the proposed fine of £7.9m, which was communicated to shareholders on 3 February 2022.”
He added: “As noted in our preliminary results release, dated 22 March 2022, and subsequently in our 2021 Annual Report published on 30 March 2022, Alliance provided in full for the proposed CMA fine despite continuing to believe that it has strong grounds for a successful appeal, which has since been filed.
“This approach required careful consideration, which included obtaining external legal advice and reviewing relevant accounting guidance in order to conclude on the appropriate accounting treatment and disclosure in the 2021 financial statements in full agreement with KPMG.”
He concluded: “The committee and the board strongly believe that the corporate governance process which was followed to finalise the 2021 financial statements was robust, challenging and appropriate. We look forward to working with Deloitte as our new auditor, and to the publication of our next audited report to shareholders in early 2023.”
