Fined by FRC: Grant Thornton next in the firing line
Doubts about the FRC’s efficiency continue to plague the watchdog body
A recent statement has been released by the FRC, referencing the misconduct of Grant Thornton.
The firm’s audits of both Nichols Plc and the University of Salford have been flagged and the watchdog has severely reprimanded and fined the member firm.
These allegations focus on the financial years ending in 2010—2013. Grant Thornton has been fined £4m; discounted because of a settlement to £3m.
Three of Grant Thornton’s senior statutory auditors – David Barnes, Kevin Engel, and Joanne Kearns – have been reprimanded and fined for their involvement. The former senior partner of the company, Eric Healey, has been fined and excluded from the ICAEW for five years.
The FRC stated: “The Misconduct relates to a former senior partner in Grant Thornton (Mr Healey) joining the Audit Committees of Nichols and the University, entities which at the time were audit clients of Grant Thornton, while he was also engaged by the firm to provide services under a consultancy agreement.”
There have also been concerns raised about the widespread and seriously inadequate controls in Grant Thornton’s Manchester office.
The FRC statement continues: “Grant Thornton, Mr Engel, Mr Barnes and Ms Kearns have admitted that their conduct fell significantly short of the standards reasonably to be expected of a Member Firm, and Members respectively, and that they failed to act in accordance with the Fundamental Principle of Competence.”
This news comes after a year of growing concern, and not just with the FRC’s competency. There has been a fair number of allegations and reprimands for the Big Four as well.
Recent calls for an overhaul of the current system have been gathering speed ever since the collapse of Carillion earlier in the year.
As the accounting leaders, the Big Four certainly have a responsibility to be the paragons of good behaviour. Nonetheless, following a recent competence review, the FRC has been reported to be too slow in their investigations and perhaps too lenient in their reprimanding.
Instances such as the KPMG fine over Ted Baker audits, Deloitte’s audits of SIG, PwC’s BHS audit quality and EY’s Dubai gold refinery scandal have all occurred this year.
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Scandals continue to be unearthed, and other accountancy companies – including Grant Thornton – seem to be following suit. Stricter action from the FRC needs to be taken.