The Financial Reporting Council’s disciplinary wing this week announced that two mid-size accountancy firms were the subjects of investigations into their professional independence and competence.
Though there is no other connection between them, both cases had links to the drinks industry.
On Monday, the FRC’s executive counsel announced that following an investigation into the pension scheme of failed retail off licence group First Quench Mazars and its partner Richard Karmel would face a formal disciplinary complaint. The misconduct charge relates to the firm’s advice to the trustee of the First Quench Pension Fund about replacing First Quench Retailing as the scheme’s sponsoring employer of the First Quench Pension Fund.
First Quench, which ran the Threshers chain, went into administration in 2009. Two years earlier, Mazars had been brought in to provide reports to the pension fund trustees on the quality of covenants provided by First Quench and a “newco” mooted to take over the scheme. These and a third report presented on the benefits and risks of retaining First Quench Retailing as the sponsoring employer “fell significantly short of the standards reasonably to be expected” of ICAEW members for professional competence and due care, objectivity, integrity and confidentiality, the FRC complaint alleged.
On Tuesday the FRC confirmed that its Accountancy Scheme would investigate whether Grant Thornton was independent when it conducted the audits of drinks group Nichols plc for the years ended 31 December 2011 and 2012.