Grant Thornton fined for inadequate audit of unnamed firm<\/p>\n<\/p>\n
The Financial Reporting Council (FRC) initially penalised Grant Thornton \u00a3650,000 after uncovering a series of mistakes in a 2016 audit of a mystery company not named in the decision notes but reduced the amount for co-operation.<\/p>\n
Errors surrounding the firm\u2019s valuations of the \u201cprincipal assets\u201d of the listed company, which were considered a \u201csignificant risk\u201d, alarmed the regulator.<\/p>\n
It said the auditor \u201cfailed to select an audit sample that was sufficient to reduce the sampling risk\u201d to an acceptably low level.<\/p>\n
There were also failures to exercise sufficient professional scepticism and to prepare adequate audit documentation, the FRC said.<\/p>\n
The audit engagement partner at the centre of the mishap was fined \u00a320,000, later reduced to \u00a313,000 for early co-operation with the regulator.<\/p>\n
Although in the note accompanying the decision<\/a> the FRC said its \u201cmission is to promote transparency\u201d in business, its refusal to name the audit firm has attracted scorn.<\/p>\n \u201cThose affected by poor audits have every right to know the identity of the organisation so they can ask questions about its governance and operations,\u201d said Prem Sikka, professor of accounting and finance at the University of Sheffield.<\/p>\n He said despite their declarations of transparency, the organisation\u2019s new controllers \u201chave totally failed to apply those principles to its operations\u201d.<\/p>\n The decision to withhold the name of the company or partner was made by the FRC\u2019s 10-member conduct committee which is overseen by David Childs, former managing partner of magic circle law firm Clifford Chance.<\/p>\n The FRC declined to offer a response when asked why it had withheld the details of the relevant parties but said it was confident none of the breaches were intentional, dishonest, deliberate or reckless. It added that it does not question the truth or fairness of the 2016 financial statements, which have not been subject to any restatement.<\/p>\n Despite its reputation as one of the strongest rivals to the dominant Big Four accounting giants, Grant Thornton has endured a turbulent couple of years. Last year it was fined \u00a33m for misconduct over the audits of both Vimto-maker Nichols and the University of Salford.<\/p>\n In July, the FRC said it would ramp up the scrutiny<\/a> of Grant Thornton\u2019s audits after discovering more than one in four reviewed in the past five years required \u201csignificant improvement\u201d.<\/p>\n It has also suffered a public mauling over its audits of Patisserie Valerie<\/a>, and it is currently under investigation by the UK accounting watchdog for its work on the collapsed bakery chain<\/a>, which it has audited since 2006.<\/p>\nTurbulent years<\/strong><\/h3>\n