Pursuant to the Auditor Regulatory Sanctions Procedure, and following an inspection by the Financial Reporting Council (FRC)’s Audit Quality Review (AQR) team, the FRC’s Enforcement Committee has concluded that Grant Thornton UK failed to comply with the Regulatory Framework for Auditing in its audit of a local authority’s pension fund for the year ended 31 March 2021.

The committee found failures in the reviewed audit, which it considered represented a significant departure from the standards expected of a registered auditor and had the potential to affect the public, employees, pensioners or creditors. These included two uncorrected material errors which appeared in the version of the pension fund’s audited financial statements that was included in the local authority’s annual report (these errors did not appear in the pension fund’s own financial statements) and insufficient audit evidence obtained that the value of investments was materially accurate. 

The committee considered that it ‘necessary’ to impose a sanction to ensure that Grant Thornton UK local audit functions are undertaken, supervised and managed effectively. The committee further issued a notice of proposed sanction proposing a regulatory penalty of £50,000, adjusted by a discount of 20% for co-operation and other mitigating factors to £40,000. The sanction has been accepted by Grant Thornton UK.
In addition, the committee accepted written undertakings proposed by Grant Thornton UK, and the FRC announced that it will monitor compliance with the undertakings.

The committee further acknowledged that “Grant Thornton UK provided co-operation, including at an early stage, took appropriate remedial steps promptly once the failing was identified and demonstrated contrition”. There was also no evidence to support financial gain or benefit from the failure.

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