FRC fines Mazars £72k over audit failings

The FRC’s enforcement committee has determined that Mazars failed to comply with the regulatory framework for auditing, and as a result, has fined the firm £72k. 

While the original regulatory penalty was £90k, the FRC adjusted the fine by a discount of 20% for “co-operation and certain admissions”. 

According to the committee, it considered it necessary to impose a sanction to ensure that the accounting firm’s audit work is undertaken, supervised and managed effectively. 

This comes as the committee found “wide-ranging” failings in respect of the audit of a market traded company’s financial statements. 

The most significant failing was in respect of the incorrect classification of Convertible Loan Notes, resulting in a material misstatement which was not identified by Mazars until after the audit was completed. The committee said this demonstrated “a lack of quality control”. 

Other areas of concern included the way in which bonus payments were addressed.

The committee has accepted written undertakings proposed by the firm. However, the FRC’s AQR team will monitor compliance with the undertakings and report to the council’s supervision committee and the relevant supervisory body. 

A spokesperson for Mazars said: “Mazars can confirm that it has accepted a regulatory penalty and committed to specific undertakings following the findings of the FRC’s enforcement committee. 

“We are disappointed that we did not meet the high standards required in this instance and we retain our steadfast commitment to, and investment in, delivering quality audits.” 

They added: “We are grateful that the regulator has acknowledged Mazars’ cooperation and, respecting client confidentiality and due process, will provide no further comment.”