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FRC announces new Grant Thornton probe

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8th Aug 2013
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Grant Thornton UK is under investigation by the Financial Reporting Council (FRC) for the accounting and audit of interest rate swap arrangements at the Manchester Building Society.

This is the second investigation into the firm announced this week by the FRC. On Tuesday, the regulator announced it would look into the firm's audit of drinks group Nichols PLC.

Both investigations are taking place under the council’s Accountancy Scheme and followed consultation with the ICAEW.

This most recent investigation focuses on GT’s accounting and auditing of interest swap arrangements, which gave rise to a prior period adjustment in the building society’s 2012 accounts.

Manchester Building Society is the UK’s 16th largest building society and is based in Manchester city centre. It provides individually underwritten residential mortgages and discounted variable rate and fixed-rate mortgage products.

The building society published its results for year ended 31 December 2012 in June and included in its statement information on an alteration of the accounting treatment of its long-term mortgage book and related interest rate hedges under IAS39.

The change led to a downward restatement of the society’s 2011 retained earnings by £28.7m to £9.7m and resulted in a restated 2011 pre-tax loss of £21.9m.

Information received from the Prudential Regulation Association (PRA) in relation to the conduct of auditor at the time led to the FRC’s decision to investigate.

Grant Thornton said in a statement that it acknowledged the FRC’s announcement and would fully co-operate with the investigation.

“The FRC and GT have a common interest in promoting good corporate governance and reporting standards and as such we alerted the regulator as soon as we became aware of a potential issue,” a spokesperson said.

Finance director of Manchester Building Society Chris Gee added that he could not elaborate further on the FRC’s announcement, but said the society would provide any assistance it can in all enquiries.

Replies (1)

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By jefflcbba
15th Aug 2013 20:15

GT: are they still insured?

With the Tchenguiz case perhaps going to cost this firm £2.5b will someone please confirm that GT still have insurance?

Thanks (0)