UKH Hacker Young has been “severely reprimanded” and slapped with a £350,000 fine by the accounting watchdog over its audit of Laura Ashley.
The Financial Reporting Council has imposed serious sanctions on the firm for its audit of the fashion retailer for the 2018 and 2018 financial years.
The retailer, which had 155 UK stores in 2019 and employed more than 2,700 people in 2019, called in administrators during the pandemic.
Audit reports for the years were “unmodified and noted no material uncertainty related to the use of the going concern assumption,” the FRC said, with the firm’s revenue and profit declining “consistently” since the 2016 full year.
A partner at the company, Martin Jones, was slapped with a £45,000 fine and a severe reprimand.
Both parties admitted “serious breaches” of their requirements and thus the two audits of “each failed in their principal objective”, to obtain assurance the financial statements “were free from material misstatement.”
The London-based accountancy firm has also been required to pay executive counsel’s costs of the investigation.
“The breaches in this case were serious and spanned two audit years affecting multiple areas of the audits, some which were fundamental to the proper conduct of audit,” Jamie Symington, deputy executive counsel, said.
It comes as the FRC this week vowed to introduce a raft of new measures to boost audit sector standards.
On Tuesday, the council published a paper outlining its plans to revise existing codes, strengthen standards, and overhaul the UK Corporate Governance Code, in line with the UK government’s plans for audit sector reform.