Mid-tier audit firm Grant Thornton UK is facing "severe reprimands" and a massive fine -- to the tune of $1.58 million USD -- for auditing infractions dating back to 2016.
According to an Accounting Today report, the U.K.’s Financial Reporting Council has issued the fine due to problems with the firm's audits of the sportswear company, Sports Direct International. Per AT's article:
The FRC imposed severe reprimands and fines Monday against the firm as well as a former partner, Philip Westerman, for their audits of Sports Direct’s financial statements for fiscal years 2015-2016 and 20170-2018. Both admitted to problems and their fines were reduced by the FRC. Westerman’s was reduced to a total of nearly £80,000, or $95,000.
The major accounting firm has issued a statement, which reads, in part:
We are pleased to now conclude these long-running matters, which date back to 2016. Having invested significantly in the quality of our audits since this time, we have seen a marked improvement in our results and are confident that the issues identified by the FRC’s investigations, whilst limited to discrete areas of the audits, are not reflective of the work we produce today.
This is not the only issue impacting Grant Thornton currently. The firm is among seven total accounting companies -- including Ernst & Young (EY), Deloitte, Klynveld Peat Marwick Goerdeler (KPMG), PricewaterhouseCoopers (PwC), BDO, and Mazars -- called out by the FRC as part of a worldwide cheating scandal that saw employees at various auditing companies untruthfully pass exams.
Financial Times reported on the ongoing situation, noting that the UK accounting watchdog is ordering chief executives of the United Kingdom's seven largest auditors -- the Big Four and their three mid-tier competitors -- to thoroughly explain how they intend to stop workers from cheating on exams in the future.
It is not immediately clear if the FRC has given the accounting firms a timeline for explaining their existing procedures and implementing new ones.
What do you think about the fine Grant Thornton is currently facing?