Home Practice Management Grant Thornton’s audit quality prevents a big fine

Grant Thornton’s audit quality prevents a big fine

614
0

Grant Thornton UK was subject to a investigation by the UK regulator the Financial Reporting Council (FRC) for their audit work of Globo Plc, a mobile technology provider. The regulator found insufficient evidence of misconduct and advising that no further action be taken against the accountancy firm

According to Accountancy Daily, Grant Thornton was appointed as Globo’s auditor in March 2014, replacing BDO, which had only been in place for a few months. In October 2015, the Globo CEO and CFO resigned after notifying the board of ‘falsification of data and the misrepresentation of the company’s financial situation’. The FRC probe, was launched in December 2015, one month after Globo had gone into administration.

According to the FRC ‘The investigation focused on the matters within the jurisdiction of the Scheme ie, Grant Thornton’s group audit and specifically, its direction, supervision and performance of the group audit engagement. This included Grant Thornton’s evaluation of the sufficiency and appropriateness of the audit evidence obtained by component auditors to express an opinion on the group financial statements”.

‘At the conclusion of the investigation, and in accordance with the provisions of the Scheme, the Executive Counsel considered whether there was a realistic prospect that a Tribunal would make a finding of misconduct. Misconduct means an act or omission or series of acts or omissions which falls significantly short of the standards reasonably to be expected of an auditor. The test which would be applied by a Tribunal is whether the conduct is more than negligence and must cross the threshold of real seriousness,’ said the FRC.

‘Following consideration of all the relevant evidence gathered during the investigation, the requirements of ISA 600 (Audits of Group Financial Statements), ISA 220 (Quality control for an Audit of Financial Statements) and ISA 240 (The Auditor’s Responsibilities Relating to Fraud) and the opinion of an independent expert, the Executive Counsel concluded that there was no realistic prospect of a finding of misconduct.’