FRC fines Grant Thornton £40k over pension fund audit failure

The committee found failures in the reviewed audit, which it considers represented ‘a significant departure from the standards expected of a registered auditor’

The FRC’s enforcement committee has sanctioned Grant Thornton £40k after it was found that the firm failed to comply with the regulatory framework for auditing in its audit of a local authority’s pension fund for the year to 31 March 2021. 

News follows an inspection by the FRC’s audit quality team, in accordance with the auditor regulatory sanctions procedure. 

According to the committee, it found failures in the reviewed audit, which it considered represented “a significant departure from the standards expected of a registered auditor”. 

Mistakes made by Grant Thornton 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 – but which did not appear in the pension fund’s own financial statements.

In addition, the firm had supplied insufficient audit evidence, which meant that the value of investments was materially accurate. 

The enforcement committee added that the non-compliance had the potential to affect the public, employees, pensioners and creditors.   

The committee considered that it is necessary to impose a Sanction to ensure that Grant Thornton’s local audit functions are undertaken, supervised and managed effectively. 

As a result, the committee proposed a regulatory penalty of £50k, which was adjusted by a discount of 20% for co-operation and other mitigating factors to £40k. 

The sanction has been accepted by Grant Thornton, with the committee also accepting written undertakings proposed by the firm. Meanwhile, the FRC will monitor compliance with the undertakings. 

The Committee has acknowledged that 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.

Grant Thornton has been approached for a comment

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