The Financial Reporting Council (FRC) has fined Grant Thornton UK £3m for “firm-wide failures” to ensure compliance with ethical standards and requirements between 2014 and 2017.
The fine, which was discounted to £1.95m for admissions and early disposal, also related to the loss of independence in relation to Grant Thornton’s audit of Conviviality Retail Plc for the year ending 30 April 2014.
The accountancy firm admitted to breaching very important standards designed to preserve the integrity, objectivity and independence of audit.
The FRC said the firm also failed to take responsibility for ensuring an appropriate control environment that placed adherence to ethical principles and compliance with ethical standards and requirements above commercial considerations.
In particular, the UK watchdog noted that its policies and procedures designed to ensure compliance were “defective”, as well as being “inadequately implemented and monitored”. The failures were repeated and prolonged over a course of three years and resulted in “numerous breaches of ethical standards and requirements by the firm’s partners and staff”.
However, the Executive Counsel recognised that Grant Thornton had taken the matters identified in the investigation “seriously” and has acknowledged its “failings”, and that the firm has recently been undertaking remedial action in order to address these issues.
The FRC said it is also acknowledged that Grant Thornton has provided a “good level of cooperation during the investigation”.
Claudia Mortimore, deputy executive counsel, said: “It is vital that audit firms comply with ethical standards and requirements and create the necessary culture and control environment so that their people really understand their importance.
“In this case, there were firm-wide failures over a number of years which not only led to numerous breaches of such requirements on individual audits but also the real risk of more such breaches which have not been, and will never be, reported or identified.”
She added: “The sanctions in this matter not only send a clear message as to how seriously the FRC views such failures but are also focused on ensuring that there is no repetition and the causes of the failures are effectively addressed at their roots.”