FRC initiates investigation into EY’s audit of Made.com

FRC initiates investigation into EY's audit of Made.com

This is the second investigation the FRC has commenced into audits by EY this week

FRC initiates investigation into EY’s audit of Made.com

The Financial Reporting Council (FRC) has opened an investigation into the audit of Made.com completed by EY, the second the firm faces this week.

On 20 April, the UK’s audit regulator announced it had commenced an inquiry into the Big Four firm’s audit of Made.com for the fiscal year concluding 31 December 2021.

The online furniture retailer entered administration in November 2022, resulting in more than 300 employees losing their jobs. Subsequently, fashion retailer Next took control of the company for £3.4m.

The news comes the same day as another EY audit has come under investigation by the FRC of an unnamed company, relating to a breach of the fee cap requirements set out in the FRC’s Revised Ethical Standard 2019.

“We can confirm that EY has been notified of the FRC’s intention to conduct investigations into the audit of Made.com Group plc, and into a breach of the fee cap requirements during the EY audit of another company, both for the years ended 31 December 2021,” the auditor said in a statement.

“We will be fully cooperating with the FRC during their enquiries. It would be inappropriate to comment further at this time.”

The decision to commence the two investigations was made in March 2020 at a meeting of the FRC’s Conduct Committees. Both inquiries will be administered by FRC’s Enforcement Division under the Audit Enforcement Procedure.

Reacting to the news, Mike Suffield, director of policy and insights at ACCA, says: “It is a sign of a healthy corporate governance regime that if audits appear to have not met expectations – especially in public interest entities – that an investigation can find out what went wrong and what lessons can be learned.

“We support the highest standards in corporate reporting and good governance requires audits to be performed to the audit standards.”

The FRC’s publication of the investigation can be found here.

 

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