Deloitte, KPMG and PwC have already submitted their offers to take control of the accounts of Sacyr between 2022 and 2024, according to various financial sources consulted by Information. The presiding group Manuel Manrique launched the competitive process a couple of months ago. He did it urgently, as a result of the sanction that the Institute of Accounting and Auditing (ICAC) imposed on Hey, the current auditor of the group, for its performance in the supervision of Sacyr’s accounts in 2015. The ICAC ruling means that the professional services company is disqualified from auditing the construction group in the next three years.
The ICAC sanctioner has forced Sacyr to ‘break’ ahead of time with EY, a firm that has continuously supervised its accounts since 2004. The Audit Act 2016 obliges the provider of these services to be relieved after ten business relationship years have elapsed, but this standard included an exceptional rotation schedule for those companies that had kept the same auditor for at least 20 consecutive years on the effective date of the law. Such was the case of Sacyr, that it could have extended its business relationship with EY until 2023.
Sacyr has opened an express competitive process. The concessionaire has limited itself to knocking on the door of the three great rivals of EY, the company that it presides over in Spain Federico Linares placeholder image, leaving the main medium-sized firms out of the call (Mazars, BDO and Grant Thornton). The company made a move before the end of the summer, when it referred to the Big Four calls what is known as ‘request for proposals’, as confirmed by sources of the construction group in consulted by this means.
The applicants have already exhibited muscle in the framework of a process that is taking place in a climate of enormous competitiveness. Sacyr paid just over 3 million euros to EY for the 2020 audit. In addition, the firm’s set of fees included other 854,000 euros for the provision of other services other than the audit itself. The contract of the new auditor covers the period 2022-2024, which translates into a combined amount of more than 9 million. In addition, adding the account control of a Sacyr packaging company to the portfolio represents an important reference in the national market.
Time is running out for those candidates who have entered the tender with incompatibilities derived from possible contracts that they may have signed with Sacyr and that, now, represent an impediment to exercise audits of the concessionaire. Any setback must be resolved before the end of the year, when the company plans to make a decision. The urgency to settle the selection before the start of 2022 responds, to a large extent, to the fact that in January the audit teams of the Big Four are focused on preparing the annual reports of the companies under their supervision.
EY’s legal team has decided not to appeal the ICAC sanction given, among other issues, the high degree of interpretation of the rules referred to by the supervisor.
Sacyr has proposed to settle this process before the next shareholders’ meeting, since the signature made with the piece must be ratified at said meeting, which the company traditionally holds in June. This year’s, however, took place in second call on April 29. It was then that the dealership decided to rehire EY’s services for 2021. Both firms would have maintained this business relationship until 2023 had it not been for the sanction of the supervisor. All in all, EY continues to be the benchmark auditor in the construction sector in Spain, having in its portfolio some of the flagships of the national industry such as OHL, Ferrovial and FCC.
The ICAC ruling against Sacyr’s historic auditor includes, in addition to the disqualification, two fines for a combined amount of one million euros. From the consulting firm they subscribe to the correction of the work that has been carried out: “We have acted in accordance with the auditing standards”. However, the legal team of the firm has already analyzed the probability of success of a legal battle against the ICAC and has decided not to appeal “given the extremely high technical complexity of the matter to be addressed, the high level of interpretation of certain rules to which that refers to the matter and the fact that, so far, no recourse of this type presented by other firms has prospered“.