The fine was reduced to £5.8m due to admissions. The FRC investigation centred on systemic failures in supervision that allowed a senior manager to engage in dishonest conduct over several years.

Between 2015 and 2019, the manager created false audit evidence, issued unapproved auditor reports, and inserted electronic copies of partners’ signatures without their approval.

Former partners John Everingham and Kevin Cook admitted to inadequately supervising, monitoring, and overseeing 21 and 13 audits, respectively.

The FRC found that BDO “did not have sufficiently robust systems and controls in place from 2012 to 2019”, which enabled the manager’s misconduct to go undetected.

In addition to the firm’s fine, BDO must pay £716,000 in costs and provide reports to the FRC every six months for two years.

John Everingham (resigned July 2021) received a severe reprimand, a £189,000 fine (reduced from £200,000), and a six-year audit ban.

Kevin Cook (resigned July 2019) received a severe reprimand, a £90,000 fine (reduced from £100,000), and a three-year ban.

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.

“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 forensic investigation, and commencing a remediation programme to improve our systems and controls. We have fully co-operated with the FRC during its investigation.”

The spokesperson added: “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”.