EY has been slapped with a £2.75m fine over audit misconduct

 
Courtney Goldsmith
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The FRC announced it opened the case in 2014 (Source: Getty)

The Financial Reporting Council (FRC) has fined Ernst & Young £2.75m after the accountancy giant admitted misconduct relating to the audit of financial statements of Tech Data Limited.

The FRC, which announced the probe in August 2014, investigated statements for the financial year ending 31 January 2012.

After admitting to the misconduct, EY received a reprimand and a fine of £2.75m, adjusted for mitigating factors and discounted for settlement to £1.8m, and Julian Gray, senior statutory auditor and audit engagement partner, was fined £90,000, which was reduced to £59,000.

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EY will also have to pay £225,000 towards the FRC's investigation costs.

The misconduct related to three audit areas, and included failures to obtain reasonable assurance about whether the financial statements as a whole were free from material misstatement, failures to obtain sufficient appropriate audit evidence and failures to exercise sufficient professional scepticism.

Tech Data is a wholesale retailer to the computer and mobile communications sectors.

A spokesperson for EY said:

Audit quality is an ongoing focus and priority to EY, however we recognise that we fell short of our professional standards on three matters in relation to the audit of Tech Data Limited (formerly Computer 2000 Distribution Limited) for the financial year ending 31 January 2012.

The results of the latest inspection report from the Financial Reporting Council (FRC) recognises the significant level of investment EY has made in audit quality, particularly over the last three years, and demonstrate our continued progress.

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