The auditor of British Steel has resigned, after the troubled Chinese-owned steelmaker balked at the fees it quoted to sign off the company’s books and refused to compensate it for difficulties with the previous year’s audit.
Accounting firm Mazars resigned in July but its decision emerged on Wednesday, days after British Steel owner Jingye reportedly asked the government for financial support.
In a filing at Companies House, Mazars said it resigned in a dispute over what British Steel was willing to pay for its services.
Mazars did not say what fee it had proposed but it was paid £323,000 for its work on the company’s audit in 2020, a year in which British Steel reported revenues of £844m but suffered heavy operating losses.
That year’s audit, the first since British Steel was bought by the Chinese firm Jingye, proved more tricky than expected, according to Mazars.
Mazars said: “Based on our understanding of the complexity, risk and control environment of the company gained from our prior year audit, we proposed the minimum fee we believed necessary to audit the financial statements of the company to an acceptable level of audit quality.
“Despite extended discussions, the company was not prepared to agree to that minimum fee level.
“Furthermore, to date, the company has also not agreed to pay requested overruns for delays and audit issues arising during the prior year audit.
“Consequently, we have resigned as auditor to the company.”
Mazars said it was not aware of any matters that it should bring to the attention of the company’s creditors.
A British Steel spokesperson said: “Following a tendering exercise, we have appointed another firm to act as our auditors.” The company did not say which firm it had appointed.
British Steel sank to an operating loss of £140m in 2020, according to accounts that showed its financial difficulties continued after Jingye’s takeover.
Jingye bought the company in 2020, saving 3,000 jobs, after a prolonged period in which the British government struggled to find a buyer for the owner of the Scunthorpe steelworks, one of only two such plants in the UK that still operates a blastfurnace.
Ministers had agreed a financial support package worth as much as £300m in the hope of securing backing from a private bidder.
However, earlier this month, Jingye reportedly told ministers that its two furnaces were unlikely to remain viable unless the company was granted a bailout.
