The FRC has fined Baker Tilly UK Audit LLP £750,000 and its partners Richard King and Steven Railton £30,000 and £35,000 respectively, following an investigation in relation to the audit of the financial statements of Tanfield Group plc and two of its subsidiaries for the year ended 31 December 2007.
An independent tribunal made findings of misconduct following hearings in October 2017 and November 2018. The FRC said the findings of misconduct and sanctions are in connection with the audit of Tanfield’s inventories and trade receivables, the “most significant” items on Tanfield’s balance sheet.
The independent tribunal found that errors and discrepancies in the audit work were not identified by the partners. The tribunal also found that the response by Railton to a profit warning in Tanfield’s trading statement on 1 July 2008 was inadequate where the subsidiary accounts were still to be approved.
The FRC’s investigation was commenced in September 2009 and concerned the audits of the financial statements of Tanfield and two of its subsidiaries for the years ending 31 December 2007 and 2008. Tanfield was at the time (and remains) an AIM listed group whose primary activities were the manufacturing of electric vehicles and powered access equipment.
Baker Tilly undertook the audits with King as the engagement partner for the audits of Tanfield Group, and Railton was the engagement partner for the two subsidiaries under investigation.
A formal complaint was delivered in June 2014 relating to the audit in respect of the year ended 31 December 2007 only.