Regulators

FRC fines Mazars £314,000 for audit failings

The sanction was accepted by Mazars with the committee proposing a discount of 20% for co-operation and admissions to £250,000

The Financial Reporting Council (FRC) has issued a £314,000 sanction to Mazars for its audit of a local government authority’s 2019 financial statements.

The sanction was accepted by Mazars with the committee proposing a discount of 20% for co-operation and admissions to £250,000.

The most significant “failing” was in respect of the PPE valuation. It was found that there was “insufficient and undocumented” challenge of the accounting treatment for refurbishment costs in the valuation of the authority’s dwellings which could indicate a “material overvaluation”.

Other areas of concern included first-year independence, group oversight and quality control. 

The committee also found failures in the reviewed audit, which it considered fell “far short” of the applicable standards and regulations and had the potential to “undermine confidence” in the standards in general of registered auditors.

A spokesperson for Mazars said: “Having worked closely with the FRC throughout its investigation, we accept and regret that the quality of our work did not meet the standards expected.

“The most recent local government audit inspection report by the FRC, published in October 2021, found that that all four financial statement audits reviewed were graded in the top category of ‘good or limited improvements required’ and identified good practice in our audit work.”

They added: “Mazars has made significant investments in our teams and processes which are recognised in the FRC’s October 2021 report, including in relation to our work on the valuation of property assets. We are entirely focused upon delivering high quality for our clients, and will continue to instil a culture of no compromise when it comes to applying the highest professional standards.”

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