EY fined £1.8m over Tech Data audit
The firm admitted misconduct in three areas in relation to the audit of the financial statements of Tech Data Limited for financial year ending 31 January 2012
The Financial Reporting Council (FRC) has fined EY £1.8m over misconduct in relation to the audit of the financial statements of Tech Data Limited for the financial year ending 31 January 2012.
Julian Gray, senior statutory auditor and audit engagement partner has also been fined £59,000 after he and the firm admitted that their conduct “fell significantly short” of the expected standards.
EY and Gray also admitted that they “failed to act in accordance with the ICAEW’s Fundamental Principle of Professional Competence and Due Care”, according to a statement from the FRC.
The audit misconduct related to a failure to obtain reasonable assurance that the financial statements were free from material misstatement, failure to obtain sufficient appropriate audit evidence and failure to exercise sufficient professional scepticism.
EY was originally fined £2.75m, and Gray £90,000 before having the fines reduced for mitigating factors.
In a statement, EY said: “Audit quality is an ongoing focus and priority to EY, however we recognise that we fell short of our professional standards on three matters in relation to the audit of Tech Data Limited (formerly Computer 2000 Distribution Limited) for the financial year ending 31 January 2012.
“EY is committed to performing high quality audits and has established a long-term audit quality programme in the UK and a dedicated Audit Quality Board, which are aligned to the steps we have taken globally. We also continue to invest in new technology, data analytics software and training for our people. The results of the latest inspection report from the Financial Reporting Council (FRC) recognises the significant level of investment EY has made in audit quality, particularly over the last three years, and demonstrate our continued progress.
“EY continues to listen and act upon feedback from the FRC, as well as conducting its own reviews of EY’s audit practice.”
The firm has also agreed to pay £225,000 towards legal costs.
In August this year, PwC was fined a record £5.1m over misconduct relating to its audit of RSM Tenon. KPMG has also recently been at the centre of a corruption scandal in South Africa.