EY, the accountancy group that checked the books for collapsed Christmas savings club Farepak, was yesterday reprimanded and agreed to pay £1.2m in fines and costs.
Farepak’s collapse in 2006 left more than 100,000 savers out of pocket by a total of £37m.
The Financial Reporting Council found yesterday that EY and its then-partner Alan Flitcroft failed to gather enough information to properly audit Farepak’s 2005 accounts. The firm also failed to spot liquidity and cash problems faced by the company when it signed off the accounts in February 2006.
“We are extremely delighted that they have been reprimanded and hope they have learned lessons from it,” Suzi Hall, the national campaign co-ordinator for Unfairpak, told City A.M.
EY said the settlement does not allege that the firm’s actions caused or hastened Farepak’s administration.