Flutter Entertainment has named Deloitte as the auditor for its Paddy Power and Betfair sportsbook brands, according to a report from The Times.

Deloitte replaces KPMG – one of its rivals in the ‘Big Four’ accounting firms alongside PwC and Ernst & Young – as Flutter’s auditor partner, ending a 20 year business relationship.

By entering into the agreement with Flutter, Deloitte has further strengthened its foothold in the betting and gaming space, with the firm having conducted auditing and accounting advisory tasks for firms such as Codere Online during its merger with DD3 Acquisition Corp.

However, Flutter has also stressed that there was ‘no compelling reason’ to replace KPMG – maintaining that the switch has not been undertaken for any commercial or fiscal purpose, but due to EU requirements. 

The EU is introducing new rules for listed companies, requiring these firms to change auditor after 10 years, which will not impact Flutter until the 2024 financial year. 

This will enable the FTSE100 gambling group to continue to use KPMG’s auditing services for a further two years before Deloitte transitions into the role. 

According to The Times, the auditing contract with Flutter represents one of the most lucrative in Ireland, with KPMG gaining £5.5 million from the deal during the 2021 financial year.

The paper reports that last year’s fee was shared around ‘several KPMG offices across Ireland, the US, Britain, Australia and other countries where Flutter maintains a presence, with £1.6 million in the first nation alone. 

Flutter is one of the most lucrative audit assignments in corporate Ireland. KPMG was paid £5.5 million (€6.5 million) to sign off the company’s accounts in 2021.

The Dublin-headquartered group capped fees for non-audit services at 70% of its total charge for auditing, meaning 6% of the £5.5 million went towards non-audit services last year.

Flutter’s change of auditor was required by an EU first introduced in 2014 that requires listed companies to change auditor after 10 years. KPMG.

EU requirements regarding auditors have undergone a more extensive overhaul over the past year in the aftermath of the Wirecard scandal, as European authorities seek to ensure greater independence of auditors from their clients. 

Wirecard, a German payment processor and financial services provider, was exposed by a Financial Times investigation revealing a number of accounting malpractices and ‘missing’ figures of €1.9 billion. 

The firm, a DAX listed enterprise, would later file for insolvency and its former CEO Markus Braun was arrested and in March of this year charged for fraud, breach of trust and accounting manipulation.

In the aftermath, the EU moved to strengthen its Transparency Directive and oversight of auditing procedures, and ensure more widespread cross-border information sharing and cooperation between member states’ financial regulators.

Valdis Dombrovskis, Executive Vice President of the European Commission on Economic Policy, disclosed to FT that the Wirecard scandal was an example of a case in which ‘investors were not given the truthful information about the state of play of the company’ – requiring greater transparency in auditor-client relationships.