Grant Thornton fined for Interserve audit failings
Grant Thornton has been hit with a severe reprimand and a £700,000 fine by the accounting watchdog after failures in the audit of the global construction and support services firm Interserve.
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“This is a proportionate package of sanctions in respect of failings over three consecutive audit years. It reflects on one hand the seriousness of certain evidence and scepticism failures in FY 2015 and FY 2016, while recognising that the adverse findings were limited to discrete areas of large audits.”
Well that's alright then if it ONLY affected large audits!
And a new exemplar of corporate smugness was achieved when a Grant Thornton spokesperson said: “.. we are pleased to now conclude this matter.”
[Quite possibly adding, sotto voce, "This won't affect my annual bonus will it?"]
The scale both of failures and their impact is not remotely commensurate with the fines ... but am I surprised?
No wonder there is so little remaining respect for 'our betters'!
Here we go again.
£730,000 between 185 partners in UK. Approx £4,000 each.
Annual salary for each GT partner is £323k.
So, this sanction amounts to less than a weeks pay!!!!
Absolute disgrace.
Disband the large practices as the audits they carry out are a complete waste of time. A local accountant will be able to do the same job i.e. useless, in a fraction of the time and save shareholders a fortune.
Get "the bloke down the pub" to do it, they're able to do everything and you NEVER hear of fraud or audit failings by "the bloke down the pub".
Other than the fact that "the bloke down the pub" is always down the pub, he's pretty much perfect!
These things never seem to be proportionate compared with ICAEW disciplinary matters for the small accoutancy practice, which are often just a matter of principle
I think there genuinely is a difference.
Large corporates failures are typically the result of management who are greedy, corrupt or dishonest (eg Carillion failing to recognise contract losses) supported by a professional finance team. The auditor may be culpable for failing to stand up to management but they do not cause the failure.
You only have to read some of the questions on Any Answers here from people who claim they are accountants to see the woeful level of knowledge - and indeed blindness to their own limitations. Their clients run the risk of direct loss from the advice given.
Maybe it's time for a re-think of how auditors are appointed.
Perhaps firms that require audits by law should pay annual "fees" to a central body which then appoints registered auditors on a rolling basis to carry out audits. Firms that provide other services for the relevant businesses will be excluding from being appointed auditors by the central body - the auditors will be paid by the central body not the companies themselves!
I think this is a good proposal generally. Managements still think the audit is within their gift and act accordingly. I don't think that doing this would affect failures of quality like this though. This is just about obtaining adequate evidence - there is no suggestion there was management pressure, or indeed that there was anything wrong with the accounts.
The reality is that the FRC piled into this audit hoping that it would be another notch on their bedpost, assuming that every commercial failure is the auditor's fault. It wasn't. They have concluded the accounts were not misstated, there is no harm done to anyone. There is no suggestion the contract balance was wrong. All they found was a couple of boxes not ticked on a large audit. Witch hunt I say.
'Simon Lowe, the then senior statutory auditor on the audit engagement, was also reprimanded by the FRC and fined £70,000, which was then reduced to £38,675. Lowe is now a consultant at the firm after leaving the audit side of the business in 2018.'
Grant Thornton are like the BBC, and other large Corporations, no one is sacked, just moved sideways.