KPMG has wrestled the lucrative Schroders audit account away from PwC after the incumbent had held it for over 50 years.
The global fund manager made the award after a tender process which kicked off in September 2012.
The company's retendering of its audit contract - valued at £3.1m in 2011 - is an indicator of a shift in boardroom thinking around relationships with external auditors amid pressure from investors who want reform of the perceived 'cosy' relationships between external auditors and company management in the interests of independence of external auditors, so as to promote audit quality.
Schroders recently appointed Richard Keers as its new CFO. Keers, who was in charge of the Schroders audit for PwC between 2006 to 2010, is set to take over from current CFO Kevin Parry in May.
A Schroders spokesman said the company's board will recommend KPMG takes over the role of auditor at the AGM in May.
In its accounts for the 2011 year end, Schroders warned that while the quality of PwC's work as auditors supported them being awarded the 2012 audit contract, regulatory changes could require compulsory tendering and/or rotation of auditors.
PwC's total fees amounted to £4.7m (2010: £4.4m) of which £2.7m (2010: £2.6m) was for the audit, £0.4m (2010: £0.4m) was audit-related and £1.6m (2010: £1.4m) was for non-audit related work, including the preparation of the internal controls report and other non-audit services including tax, compliance and regulatory opinions for group subsidiaries.
The percentage of non-audit to audit fees to total fees was 43% (2010: 41%).
KPMG, which recently axed 275 UK staff, would not comment on the win other than to say it was 'delighted' to secure the work.
James Chalmers, PwC head of assurance, said: 'We operate in a fiercely competitive market where all participants win and lose audits. We are committed to delivering high quality audits for the benefit of our clients and their shareholders.'
The change in auditor was made shortly after the Competition Commission published evidence of a low rate of audit tendering - on average only 3.3% of FTSE 350 companies switched auditor between 2000 and 2011, with the average tenure of 11 years. Among FTSE 100 companies the switching rate is lower at 2.4% a year over the same period and an average tenure of roughly 13 years.
The ongoing investigation into the UK audit market by the Competition Commission is due to report in the next month, which should clarify the position on audit rotation moving forward.