FRC sanctions UHY Hacker Young over audit quality

The Financial Reporting Council (FRC) has issued a trio of sanctions against UHY Hacker Young and Julie Wilson, an audit engagement partner at the group.

The disciplinary actions are in relation to the statutory audit of Inch Kenneth Kajang Rubber’s (IKKR’s) consolidated financial statements for FY16.

The FRC found failings in the preparation of sufficient audit documentation and ability to obtain sufficient audit evidence, as well as a lack of professional scepticism.

In turn, both UHY and Wilson have been sanctioned with “a severe reprimand” and “a declaration that the FY16 audit report did not satisfy the relevant requirements”.

Moreover, UHY has been given a number of non-financial disciplinaries, including mandatory training for the responsible individuals, implementing a root cause analysis programme, a yearly report to the FRC regarding implemented actions, and three years of root cause analysis and public interest entity (PIE) audit reports.

Wilson’s non-financial sanctions consisted of being prohibited to act as statutory auditor of a PIE for two years, external file reviews for three years, providing the FRC with ACCA inspection outcomes for non-PIE audits for three years, and agreeing to an FRC-led training programme.

The FRC did acknowledge that the breaches were not intentional, dishonest, deliberate, or reckless, but concluded that UHY and Wilson will also pay for the costs of the investigation.

Claudia Mortimore, deputy executive counsel to the FRC, said: “The relevant requirements breached in this case related to numerous fundamental areas of the audit and were designed to ensure the quality and effectiveness of the audit. 

“The proportionate sanctions are geared towards preventing recurrence of the breaches and improving audit quality.”