Accountancy firm Grant Thornton has been fined $650,000 for “inadequate” audit work for an unnamed listed company in 2016 that involved a series of “failures”.
The Financial Reporting Council (FRC) said on Tuesday that it had issued sanctions on Grant Thornton after the firm admitted breaches of accounting regulations related to the audit of the company.
In particular, the breaches related to its sampling of assets as part of a 2016 audit. The watchdog said that the sampling was inadequate and that Grant Thornton failed to select a sample of assets that would have been sufficient to conduct the audit in line with regulations.
The audit team at Grant Thornton also placed “undue reliance” on the company’s external experts when valuing assets, the watchdog said, and “did not appropriately consider the use of an auditor’s expert”, who may have called the valuation into question.
While the FRC said that there were also “failures to exercise sufficient professional scepticism and to prepare adequate audit documentation”, it noted that “none of the breaches of Relevant Requirements were either intentional, dishonest, deliberate or reckless.”
In a statement, Grant Thornton said that it regretted that the firm “fell short of expectations in this instance”.
The FRC noted that Grant Thornton had co-operated with the investigation, and has taken steps to remedy its failures, including providing appropriate training on the use of experts in these kinds of audits.
“We note that the FRC’s decision does not question the truth or fairness of the company’s financial statements for the relevant year end”, Grant Thornton said.
“The regulator also recognises that we have since taken a number of proactive steps to improve quality, including improvements in our training programmes, which build on the measures we announced earlier this year to strengthen audit quality within our firm.”