Accountancy regulator hits Grant Thornton with £3m fine

Accountancy regulator hits Grant Thornton with £3m fine

The Financial Reporting Council has fined and reprimanded Grant Thornton UK along with three of its senior statutory auditors.

The firm, along with Kevin Engel, David Barnes and Joanne Kearns, admitted misconduct in relation to the audits of the financial statements of Nichols Plc and the University of Salford for the years ending 2010, 2011, 2012 and 2013.

The Misconduct relates to a former senior partner in Grant Thornton (Healey) joining the Audit Committees of Nichols and the University, entities which at the time were audit clients of Grant Thornton, while he was also engaged by the firm to provide services under a consultancy agreement.

This, the regulator found, “created serious familiarity and self-interest threats and resulted in the loss of independence in respect of eight audits over the course of four years”.

The case also revealed “widespread and serious inadequacies in the control environment in Grant Thornton’s Manchester office over the period” as well as “firm-wide deficiencies in policies and procedures relating to retiring partners”.

Healey has admitted that his conduct was in certain respects reckless, that it fell significantly short of the standards reasonably to be expected of a Member and that he failed to act in accordance with, inter alia, the ICAEW’s Fundamental Principle of Objectivity.

Likewhire, Engel, Barnes and Kearns have admitted that their conduct fell significantly short of the standards reasonably to be expected of a member firm and members respectively and that they failed to act in accordance with the Fundamental Principle of Competence.

The FRC has fined and excluded Healey (a former senior partner in Grant Thornton) from the ICAEW for a period of five years.

The following terms of settlement have been agreed by the FRC’s Executive Counsel and approved by a legal member of the independent Tribunal Panel:

· Grant Thornton to receive a Severe Reprimand and a fine of £4,000,000 (discounted for settlement to £3,000,000). In addition, Grant Thornton will pay £165,000 in respect of the entirety of the Executive Counsel’s costs.

· Healey to be excluded from the ICAEW for a recommended period of five years and to receive a fine of £200,000 (discounted for settlement to £150,000).

· Engel to receive a Severe Reprimand and a fine of £100,000 (discounted for settlement to £75,000).

· Barnes to receive a Reprimand and a fine of £70,000 (discounted for settlement to £52,500).

· Kearns to receive a Reprimand and a fine of £60,000 (discounted for settlement to £45,000).

Share icon
Share this article: