Tesco 2014 Annual Report Download - page 39

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Business area Work undertaken Rationale for use of PwC Amount
Group PwC carried out due diligence work related to the CRE
transaction in China.
PwC’s detailed knowledge and understanding of
our business and retailing in China meant they were
uniquely placed to assist us in this key task. The
Committee considered the proposal carefully to ensure
that the independence of the due diligence team from
the ongoing audit relationship was preserved.
£1.8m
UK PwC carried out consultancy work in the UK around
organisational development.
PwC were evaluated against other potential
consultants for this work and won the engagement
based on the quality of their service offering.
Their role was one of facilitation.
All reorganisation design decisions were taken
by management.
£1.2m
UK, Europe and Asia In Asia PwC carried out tax consultancy principally
related to the tax implications of the CRE transaction
in China and legislative compliance in South Korea;
and, in Europe and the UK, the advice centred around
compliance with VAT regulations.
PwC’s understanding of the structure of our business
ensured that they were well placed to carry out this
work cost effectively.
£0.6m
The fees paid to the auditors in the year are disclosed in Note 3 of the financial statements.
To safeguard auditor objectivity and independence the Committee
oversees the process for the approval of all non-audit services
provided by PwC. Prior to approval, consideration is given to
whether it is in the interests of the Company that the services
are purchased from PwC, rather than another supplier.
This year the Committee approved PwC to complete £1.2m of
audit-related services. These services principally related to the
audit of the accounts of the Tesco China business in relation to
the preparation of the China Resources Enterprise Limited (‘CRE’)
shareholder circular required to approve the formation of our joint
venture. PwC were best placed to conduct this work as they had
previously conducted the audit work for Tesco and were fully aware
of the history of our business in China.
Where any significant non-audit related work is required (fee value
£300k), the pre-approval of the Committee is specifically required.
In total £4.7m (2013: £2.9m) was spent on non-audit fees (being
46% of the total spent with our external auditors) and details of
the significant items are shown in the table below:
36 Tesco PLC Annual Report and Financial Statements 2014
Corporate governance report continued