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The Financial Reporting Council (FRC) has fined BDO £5.85m and imposed sanctions on two former partners after finding serious misconduct and failures in audit supervision that allowed a senior manager to falsify audit work over several years.
The regulator said the case followed formal complaints filed in April 2025 against BDO and former audit engagement partners John Everingham and Kevin Cook, after an investigation into audits conducted between 2015 and 2019. During this period, a senior manager created false audit evidence, issued unauthorised audit reports and used electronic copies of partners’ signatures without approval.
The FRC found that BDO failed to respond adequately to internal reports that should have raised concerns about the senior manager’s integrity and that its systems for audit supervision and quality control were deficient between 2012 and 2019. Both partners were found to have failed to properly oversee audits, resulting in reports being issued without authority and, in some cases, with little or no supporting audit evidence.
Under the settlement, BDO will pay a £5.85m fine after a 10% discount for settlement, repay audit fees where unauthorised reports were issued, and cover £716,000 of the FRC’s investigation costs. The firm was also severely reprimanded and must report to the regulator every six months for two years on progress in strengthening its systems and controls.
Everingham was fined £189,000 and barred from audit work for six years, while Cook was fined £90,000 and banned for three years. Both received severe reprimands. Everingham’s penalty was increased by 5% for non-cooperation with the investigation before the settlement discount was applied.
FRC deputy executive counsel Jamie Symington said: “This case has established that BDO did not have sufficiently robust systems and controls in place from 2012 to 2019 to ensure that audit engagement partners diligently conducted and supervised their audits. These failures gave rise to circumstances in which misconduct could occur and remain undetected.
“The failings admitted by BDO and the two partners enabled the senior manager’s dishonest course of conduct to go undetected over several years, thereby undermining the integrity and quality of numerous audits in the relevant period. Even when evidence of the senior manager’s misconduct did emerge, the firm failed to take the steps necessary to investigate it and to protect their clients.”
Symington added that BDO had since strengthened its controls following an internal forensic investigation completed in 2021 and would be required to demonstrate the effectiveness of those improvements over the next two years.
A BDO spokesperson said: “We acknowledge and apologise that serious mistakes were made in this case. Our internal controls were not good enough and, as a firm, we did not respond adequately to internal reports which raised or should have raised concerns about the conduct of one of our (now former) audit senior managers in one of our regional offices.
“This meant that – before 2020 – the former senior manager in question was able to perpetrate what the FRC has rightly described as, “dishonesty and [a] scale of misconduct [which] was extremely serious”. We acknowledge that we, and our two former audit partners, should have detected the individual’s dishonest actions earlier than we did. None of the individuals who were respondents to the investigation work at BDO any longer.”
They added: “Once the Leadership Team was alerted to the senior manager’s misconduct in 2019, we took immediate action: self-reporting to the FRC and ICAEW, undertaking an extensive forensics investigation, and commencing a remediation programme to improve our systems and controls. We have fully co-operated with the FRC during its investigation.
“We have been determined to learn from what happened. As the FRC states, since discovering the senior manager’s misconduct, BDO has “worked to remediate and strengthen relevant systems and controls”. We will continue to monitor and, where necessary, improve controls enhancements with the oversight of our regulator.”
