Grant Thornton has agreed to pay its largest ever fine to accounting watchdogs after admitting to a long list of failings over the audit of Aim-quoted firm AssetCo.
The accountancy firm was fined £2.3m after acknowledging 12 failings that were "a result of the significant and widespread lack of professional competence and due care in the performance of the audits" of fire and rescue services firm AssetCo for the years ending March 2009 and 2010.
The firm was given a "severe reprimand" for actions that included "flawed judgements" and failing to challenge "fictitious revenues".
Meanwhile, former partner Robert Napper was also fined £130,000 and has been excluded from chartered accountancy body the ICAEW for three years for his part in the misconduct.
“The respondents have admitted widespread and significant failings in their audit work, and Grant Thornton specifically has accepted there were serious failings in the execution of certain aspects of the firm’s quality control procedures," said Gareth Rees QC, executive counsel to the Financial Reporting Council (FRC).
"This misconduct is rightly reflected in the seriousness of the sanctions, such as the exclusion of Mr Napper from membership of the ICAEW and the fines on both respondents.
"These sanctions will send a strong signal to the audit profession of the importance of upholding high standards of conduct. These sanctions will also serve to protect the public and deter future misconduct in the audit profession.”
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The fines represented a 35 per cent discount on the headline amounts of £3.5m and £200,000 for Grant Thornton and Napper respectively.
Last year the FRC levied it its largest ever fine of £4m on Big Four accountant Deloitte for audit failings in connection with collapsed aircraft parts supplier Aero Inventory.
A spokesperson for Grant Thornton said the firm had "fully co-operated with the FRC" and added:
Our audit quality processes have evolved significantly since these audits were performed in 2009 and 2010 and we are determined in our efforts to ensure our work is of the highest quality.
"Given the FRC’s ongoing proceedings against three former executives of AssetCo, in which the FRC alleges, amongst other things, that they acted dishonestly or recklessly, we are unable to comment further.”