Firms fined for audit independence breaches

Two accountancy firms have fallen foul of the ICAEW audit independence and ethics rules, according to this month's disciplinary report.

BDO and KJ Pittalis & Co were both reprimanded and fined under rules for breaching two different sets of rules for having a financial interest in the company their firms were auditing. 

In BDO's case, tax partner John Wilmott held over 45,000 shares in an unnamed company his firm was auditing, contrary to ICAEW’s Ethical Standard 2.

The firm was reprimanded by the disciplinary and fined £5,470 and ordered to pay £4,462 in costs.

The north London firm KJ Pittalis & Co, was reprimanded and fined £7,000 with £3,937 costs for the similar offence of issuing an audit report for a company in which a member of staff had a direct financial interest.

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Comments

Seems harsh for BDO

Roland195 | | Permalink

In comparison, the transgression by KJ Pittalis & Co. seems much more likely to cause an actual issue with auditor independence than the technicality with BDO, yet both have been fined similiar amounts (although £10k to BDO is likely considerably less than the £11k to Pittalis in profit terms).

Not sure what the message is supposed to be.

 

The message is simple

philevo81 | | Permalink

You have a duty to disclose for audit independence purposes any interest in a client company.

Any deviation may render the firm's independence impossible and both BDO and Pitallis should have ceased to act or refused the audit.

Independent means independent, not "possibly independent".

The message is simple - follow the rules. This is not a matter for weighing up so likelihood doesn't come into it.

Both firms had the ability to consult the Institute for guidance and it would seem they did not, or failed to adhere.