The Financial Reporting Council (FRC) of the UK has initiated an investigation into the audit practices of Deloitte and Azets regarding their work with Stenn, a collapsed invoice-financing firm.
Stenn entered administration in December 2024, following lender concerns over suspicious transactions.
The focus of the probe is on the audits conducted between 2017 and 2023, a period during which Deloitte succeeded Azets as the auditor for the 2023 financial year.
Deloitte, part of the Big Four, took over the auditing responsibilities from Azets, a top ten UK accounting firm, after the latter had stepped in post-EY’s resignation in 2018.
EY had expressed apprehensions about “certain related party transactions” and management’s explanations, as detailed in a letter made public.
The FRC’s investigation encompasses audits of two Stenn entities: Stenn Assets UK and Stenn International. The regulator has the authority to levy fines and other penalties for non-compliance with auditing standards.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalDataBanks raised flags about Stenn following the unsealing of US criminal indictments in a money laundering case, which incidentally mentioned the company and its Russian founder and CEO, Greg Karpovsky.
The indictments included allegations that Stenn Assets UK, now in administration, had received $1.7m from a company linked to a Russian individual convicted of operating an unlicensed money transmitting business.
Previously valued at $900m and partnered with global banks like Citigroup and Barclays, Stenn’s reputation was marred by Karpovsky’s history with a Russian invoice finance company embroiled in fraud accusations.
According to the Financial Times report, Karpovsky stated in December, asserting that any “proved to have taken place long after my departure from the company”.
The FRC is concurrently investigating three other audits by Deloitte, including their work with transport group Go-Ahead, clothing retailer Joules, and car dealership Lookers.
Deloitte said: “We will co-operate fully with the Financial Reporting Council’s investigation. We remain committed to the highest standards of audit quality.”
Azets said: “We responded promptly to the FRC’s request for information and are co-operating fully with its formal investigation,” reported Financial Times.
