PracticeAuditInstitute hits PKF with £100k fine and costs for audit ‘failures’

Institute hits PKF with £100k fine and costs for audit 'failures'

PKF has been left to pick up a £102,000 bill after it was fined and severely reprimanded by the ICAEW’s investigation committee for audits it conducted more than eight years ago

PKF

The audits were conducted for an unnamed company and in 2000 and 2001 PKF
gave the company unqualified audit opinions. But the investigation committee has
now found that PKF had not
met auditing standards and ordered the firm to pay a £75,000 fine and costs of
£27,000.

The fine and costs order related to audit work done on subsidiaries of the
company, the ICAEW’s
latest list of disciplinary orders and regulatory decisions revealed.

The papers said that PKF had ‘failed to obtain sufficient knowledge’ of the
workings of the subsidiaries and what impact transactions at these subsidiaries
would have on the financial statements.

The papers also said PKF had ‘failed to plan and perform the audit of the
group to obtain reasonable assurance that the group financial statements were
free from material misstatement’.

Finally, the audit failed to obtain ‘sufficient competent evidential matter’
with respect to revenues, cost of revenues and intangible assets at the
company’s subsidiaries.

Responding to the fine and costs, PKF said that since 2001, the ‘regulatory
environment’ had changed significantly and that PKF, along with the rest of the
audit industry, had ‘strengthened’ its audit processes. PKF said it had
co-operated fully with the ICAEW.

It is not known whether the fine is the largest ever ordered by the ICAEW in
a disciplinary, but experts said the fine and the costs were larger than the
norm.

‘The ICAEW will only pass on a case to the Accountancy and Actuarial
Discipline Board if it feels the case in the public interest. There is no limit
on the size of a fine the ICAEW can impose, but this one does look big,’ said
Chris Dickson, chief counsel of the Joint Disciplinary Scheme.

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