Ryanair defends use of auditor KPMG as new EU rules kick-in
Ryanair has defended its long relationship with KPMG, which has kept an eye on the airline's books for 30 years since the carrier was founded.
In the past 15 years alone, KPMG has been paid €10m by Ryanair for audit, tax and audit-related services, figures compiled by the Irish Independent show.
But new European Union rules mean that by 2020 Ryanair will be forced to seek a new auditor.
At the airline's annual general meeting at Dublin Airport last week, Ryanair chief executive Michael O'Leary said that the audit partner from KPMG who oversees the firm's work for the carrier rotates on a five-year basis.
"KPMG will have to step down and be replaced by another audit firm by about 2020," he added.
Ryanair non-executive director Declan McKeon, who's the chairman of the airline's audit committee and a former audit partner at PricewaterhouseCoopers, said that Ryanair had put its audit services out to tender "on a number of occasions", most recently in 2010.
"The arrangements were reviewed in 2013. There's been a lot of focus on it," he said. "The audit committee reviews the performance of the auditors each year. The audit firm has come out very strongly in that review over the last couple of years."
In its last annual report, Ryanair notes that the timing of the next auditor tender process will be made following the finalising of the application in Ireland of the new European Union audit rules.
Ryanair's last set of accounts were signed off by KPMG's Sean O'Keefe, a partner at the firm.
The most lucrative year to date for KPMG for its work at Ryanair was in the airline's 2007 financial year, when KPMG was paid a total of €1.2m. That included a €931,000 audit fee, €18,000 for audit-related services, and €243,000 for taxation services.
For the past three financial years, KPMG's basic auditing fee at Ryanair has been unchanged at €500,000 a year.
After studying at Trinity College, Dublin, Mr O'Leary trained as an accountant at Stokes, Kennedy, Crowley, which later became KPMG.
The new audit rules being introduced across the European Union have taken years to arrive. They were brought about on foot of the financial crisis.