LONDON (Reuters) - Britain’s accounting watchdog fined Grant Thornton 3 million pounds ($3.77 million) on Wednesday for ethics failures in relation to its audit of Conviviality, the alcohol retailer which collapsed in 2018.
The Financial Reporting Council (FRC) said the fine was reduced to 1.95 million pounds for admissions and early disposal in relation to the audit for the year ending 30 April, 2014.
Grant Thornton was fined 650,000 pounds by the FRC in December 2019 for errors in an audit of a company that the regulator declined to name. It is also being investigated for its audit of British cafe chain Patisserie Valerie.
The watchdog said Grant Thornton had agreed to a package of measures aimed at improving the quality of future audits as a result of the Conviviality action, including the creation of an ethics board.
The firm’s failures in ethics were repeated and over three years, resulting in numerous breaches of standards and requirements by the firm’s partners and staff, the FRC said.
Grant Thornton had provided an unqualified or clean audit opinion to Conviviality in circumstances where the threats to independence were such that it should have resigned from the engagement, the FRC said.
Grant Thornton said it accepted there were previously shortcomings in its processes and procedures at the time, but it was confident that such a situation should not arise again.
The watchdog imposed a severe reprimand for misconduct on Natasha Toy, a former senior manager at Grant Thornton.
Toy had been on the team auditing Conviviality, but was then seconded by Conviviality to help prepare its financial statements, contrary to standards for maintaining independence.
Toy had then sought to remove a four and a half hour time entry from the audit file.
The FRC said it recognised Toy’s hitherto unblemished disciplinary record, her genuine contrition, and exceptional level of cooperation in the investigation.
Kevin Engel, Grant Thornton’s former audit engagement partner who had instructed Toy to delete the hours from the audit file, was banned permanently from signing audit opinions, the FRC said. The ban reflects that Engel has been the subject of previous enforcement action by the FRC.
($1 = 0.7967 pounds)
Reporting by Huw Jones; Editing by Alexander Smith
Our Standards: The Thomson Reuters Trust Principles.