29th Aug 2018 12:21
LONDON (Alliance News) - The Financial Reporting Council on Wednesday issued fines and reprimands against accountancy firm Grant Thornton UK LLP and three senior statutory operators.
Grant Thornton and the auditors in question - David Barnes, Joanne Kearns, and Kevin Engel - all admitted to misconduct in their audits of financial statements for the years ending 2010, 2011, 2012, and 2013, at Nichols PLC and the University of Salford.
Nichols is an AIM-listed soft drinks maker, best known for its Vimto brand. The stock was up 0.9% at 1,473.50 pence Wednesday.
The decision relates to Eric Healey, a former Grant Thornton senior partner, who joined the Audit Committees of both Nichols and Salford University while providing consultancy services to the accountancy firm. As Nichols and the university were audit clients of Grant Thornton, it meant that their audits were not independent.
"This created serious familiarity and self-interest threats and resulted in the loss of independence in respect of eight audits over the course of four years. The case also revealed widespread and serious inadequacies in the control environment in Grant Thornton's Manchester office over the period as well as firm-wide deficiencies in policies and procedures relating to retiring partners," said the disciplinary body.
Healey a has been fined GBP200,000 and has been excluded from the Institute of Chartered Accountants in England and Wales for a five year period. This fine has a 25% discount for settlement.
Engel received a severe reprimand and GBP100,000 fine while Barnes and Kearns received reprimands. Kearns's find was GBP60,000 while Barnes's amounted to GBP75,000. All three fines have a 25% discount for settlement.
Grant Thornton itself has received a severe reprimand and a GBP4.0 million fine, which is discounted to GBP3.0 million for settlement. The firm will also be expected to pay the entirety of the FRC Executive Counsel's costs, totalling GBP165,000.
"Mr Healey has admitted that his conduct was in certain respects reckless, that it fell significantly short of the standards reasonably to be expected of a member...Grant Thornton, Engel, Barnes and 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," the FRC said.
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