FRC opens investigation into unnamed audits conducted by EY

The Financial Reporting Council (FRC) has opened an investigation into EY’s audits of the consolidated financial statements of a public interest entity (PIE) and a related non-PIE entity for the year ended 31 December 2021 and 2022. 

News of the investigation follows a decision made by the FRC’s conduct committee at a meeting held on 21 November 2024. 

The investigation will be conducted by the council’s enforcement division under the audit enforcement procedure. 

A spokesperson from EY said: “We can confirm that EY has been notified of the FRC’s intention to open an investigation into a public interest entity and a related non-public interest entity that EY audited for the years ended 31 December 2021 and 2022. We will be fully cooperating with the FRC during their enquiries.”

While the FRC has not disclosed the specific focus of the investigation, it comes as The Big Four firm has previously faced FRC-led probes into its audits of Made.com and Veolia UK’s subsidiary.

In 2022, the FRC launched an inquiry into EY’s audit of Stirling Water Seafield Finance plc for the year ended 31 December 2019. At the time, the UK accounting regulator stated that the investigation did not extend to any parties other than the statutory auditors of the Veolia-owned company. Veolia defended the quality of EY’s audit, maintaining that it had not been compromised.

Similarly, in March 2023, the FRC opened an investigation into EY’s audit of the now-defunct online furniture retailer Made.com for the 2021 financial year. That probe also included an alleged breach of fee cap requirements during EY’s audit of another, unnamed company. In response, EY stated that it would fully cooperate with the regulator but declined to provide further comment.