FRC probes Grant Thornton's AssetCo audit

The Financial Reporting Council (FRC) is investigating Grant Thornton’s audit of AssetCo, a British company which used to provide and maintain London’s fire engines.

The accounting regulator is investing GT’s “preparation, approval and audit” of the financial statements of AssetCo for the years ended 31 March 2008 to 31 March 2010 and the “preparation of financial information leading up to the identification of the restatement reported in the financial statements for the period ended 30 September 2011.”

The FRC said it decided to investigate AssetCo’s audit after it was contacted by a third party.

In 2012, AssetCo Plc sold its loss-making UK fire engine businesses for £2 and restructured the British business.

AssetCo mainly operates in the Middle East, managing fire and emergency services.

The investigation is expected to last at least 12 months before its makes any decision on whether to proceed with formal disciplinary action against GT.

The FRC can impose an unlimited fine on auditors found to have been involved in breaches of its rules and other penalties can include industry bans for individuals and even entire firms.

AssetCo has already launched a £50.8m claim against the accounting firm over what the company alleges were “negligent audits” that led to a crisis at the business that saw it sell its UK business for just £2 two years ago.

Grant Thornton resigned as AssetCo’s auditors in 2011 and was replaced by PwC.

AssetCo was eventually refinanced after reaching a deal with creditors in September 2011 with £14m of capital raised through the sale of new shares.