• Register
Return to: Home > News > Grant Thornton UK sanctioned over audit work

Grant Thornton UK sanctioned over audit work

Grant Thornton UK has been fined and reprimanded by the UK’s Financial Reporting Council (FRC) for the admission of misconducts in relation to audits and financial statements.

The fine of £4m ($5.14m), which was discounted for settlement to £3m, was issued to Grant Thornton for failing to flag misconduct in its audit work and financial statements for Nichols, a UK drinks brand, and the University of Salford for the years ended 2010, 2011, 2012 and 2013.

In addition, the regulator issued a fine of £200,000, reduced to £150,000 for settlement, to Eric Healey, a former senior partner of Grant Thornton.

The regulator excluded Healey from the Institute of Chartered Accountants in England and Wales (ICAEW) for a recommended period of five years.

Healey’s misconduct relates to him joining the audit committee of Nichols and the University of Salford, 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.

The FRC noted 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’ and that this case revealed ‘widespread and serious inadequacies’ in the control environment in the firm’s Manchester office over the period, as well as firm-wide deficiencies in policies and procedures in relation to retiring partners.

The regulator issued further fines and reprimands to three senior statutory auditors: Kevin Engel (£100,000), David Barnes (£70,000), and Joanne Kearns (£60,000). All three fines were discounted by 25% for settlement.

Healey admitted to the FRC that his conduct in certain respects was ‘reckless’ and that it fell significantly short of the standards to be expected by the ICAEW.

Grant Thornton, Engel, Barnes, and Kearns, also admitted to falling short of the standards to be expected of a member firm and members and that they failed to act in accordance with the ICAEW’s fundamental principle of competence.

In response, a spokesperson for Grant Thornton said: “Whilst the focus of the investigation was not on our technical competence in carrying out either of these audit assignments, the matter of ethical conduct and independence is equally of critical importance in ensuring the quality of our work and it is regrettable that we fell short of the standards expected of us on this occasion.

“As we have since made significant investments in our people and processes and remain committed to continuous improvement in this regard, we are confident that such a situation should not arise in the future.”

Top Content

    Brazil: regulation and technology form basis for recovery

    Opportunities in the capital markets and the ever-growing influence of technology are expected to have a significant impact on the Brazilian accounting profession over the next 12 months, writes Paul Golden.

    read more

    Mentoring support and the opportunity to delegate

    Jon Lisby will be known to many from his former role as CEO of Kreston International. Here, he explains the background to his new venture, Global Alliance Advisory Services (GAAS), and how he aims to offer support to alliance CEOs.

    read more

    Global by name, global by nature

    Stephen Heathcote became chief executive officer of PrimeGlobal on 1 June 2019. Robin Amlôt met him to discuss the various new challenges that he has taken on, and his ambitions for the association.

    read more

    ARGA team, assemble!

    The new top team has been named that will see in root-and-branch reform at the Financial Reporting Council (FRC) as it transforms into the Audit, Reporting and Governance Authority (ARGA). Will the new duo be as dynamic as some are hoping? Robin Amlôt reports.

    read more

    CORONAVIRUS TIMELINE: REACTIONS FROM THE ACCOUNTANCY PROFESSION

    As the Coronavirus (COVID-19) continues to spread across the world, the International Accounting Bulletin and The Accountant will be collating all the latest news and updates from the profession on the pandemic’s impact.

    read more
Privacy Policy

We have updated our privacy policy. In the latest update it explains what cookies are and how we use them on our site. To learn more about cookies and their benefits, please view our privacy policy. Please be aware that parts of this site will not function correctly if you disable cookies. By continuing to use this site, you consent to our use of cookies in accordance with our privacy policy unless you have disabled them.