LONDON (Reuters) - The Financial Reporting Council (FRC) said on Wednesday it had fined Grant Thornton 4 million pounds ($5.1 million) after four of its senior staffers admitted misconduct in handling the financial audits of Nichols Plc and the University of Salford.
The latest in a series of reprimands for several of Britain’s biggest auditing firms, the FRC said it had also issued a 200,000 pound fine to the company’s former senior partner Eric Healey and excluded him from the Institute of Chartered Accountants in England and Wales for five years.
The FRC found Healey, who settled a discounted fine of 150,000 pounds, was providing consultancy services while at the same time performing duties on the audit committees of Nichols Plc and the University of Salford.
The FRC said this created “serious familiarity and self-interest” and resulted in the loss of independence in respect of eight audits over the course of four years.
The FRC’s investigation 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.
In addition to the company fine, which was settled at 3 million pounds, Grant Thornton has been ordered to pay 165,000 pounds to cover the executive counsel’s costs.
Three additional Grant Thornton auditors also 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.
Kevin Engel will receive a severe reprimand and a fine of 100,000 pounds while David Barnes and Joanne Kearns will be fined 70,000 and 60,000 pounds respectively. All the fines have been discounted for settlement.
($1 = 0.7841 pounds)
Reporting By Pamela Barbaglia, editing by Sinead Cruise