The UK Financial Reporting Council (FRC) has fined audit firm Arrandco Audit, formerly RSM Tenon, £1m (USA $1.4m) for audit failures at insurance claims processor and digital services group Quindell.
Both the firm and audit engagement partner Jeremy Filley admitted to the misconduct in the auditing of Quindell Portfolio and Quindell Ltd.’s financial statements for the year ended 31 December 2011. The firm’s fine was reduced to a £700,000 settlement for mitigating factors and also had to pay £90,000 towards the FRC’s costs. Institute of Chartered Accountants in England and Wales (ICAEW) member Filley was fined £80,000, reduced to £56,000.
Since the failure, Quindell rebranded as Watchstone Group, but has had its shares suspended for issues including missing an audit deadline in 2015. Shares were also suspended pending the results of a December 2014 analysis of the company’s accounting policies conducted by PwC. The analysis found inappropriate errors in a shareholder circular on the sale of the professional services division to Australian law firm Slater & Gordon.
RSM Tenon became Quindell’s auditors in 2011, replacing Deloitte, yet KPMG took over in October 2013.
The FRC investigation, opened August 2015, is ongoing for the group’s 2013 and 2014 accounts. RSM Tenon was acquired by Baker Tilly UK (Baker Tilly) in 2013, a few months before Baker Tilly left the Baker Tilly International network to join RSM International.