Grant Thornton has been fined over £700,00 by UK regulator Financial Reporting Council (FRC) for audit failings at Interserve, a British multinational construction business which collapsed in 2019.
The fine comes just over a month after the FRC issued another sanction, of £2.3m, on the accounting giant for a “serious lack of competence” in the company’s audit of high-street café chain Patisserie Valerie.
The FRC said the fine against Grant Thornton for Patisserie Valerie would have been £4m, but was adjusted for “exceptional levels” of cooperation.
Similarly, the FRC reduced the sanction against Grant Thornton, the UK’s sixth largest accounting firm, for its audit of Interserve, a former FTSE 250 company, from £1.3m to just under £720,000.
There was “significant public interest” in the audit of Interserve, the FRC said, due to its size and the high-profile nature of the company, whose clients included public-sector organisations.
The accounting company was also issued a “Severe Reprimand” by the FRC.
Grant Thornton’s sanction came as a result of findings by the FRC of “serious evidence and scepticism failings by the auditors in respect of key judgements and accounting estimates”.
The lead of the Interserve audit and a former partner at Grant Thornton, Simon Lowe, was also fined and reprimanded by the FRC. His fine, reduced from £70,000, fell just shy of £40,000. Lowe left the firm in 2018 but is still a consultant at the accounting giant.
“Whilst we acknowledge the regulator’s findings that certain limited aspects of our work were below expectations in this instance, it’s important to note that the findings did not assert that the company’s accounts were materially misstated in respect of these matters,” a Grant Thornton spokesperson said.
“We are pleased to now conclude this matter,” the spokesperson added.