9am Lowdown: Grant Thornton fined £2.3m
The Financial Reporting Council livened up Monday morning with news of a severe reprimand and stonking fine for Grant Thornton. Elsewhere, election intrigue is growing as the parties began to tease out their manifesto plans. Japan’s Fujifilm has delayed its earnings announcement after accounting irregularities.
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Grant Thornton reprimanded for AssetCo audit flaws
Grant Thornton and its former audit partner Robert Napper have been sanctioned to the tune of £2.5m by the Financial Reporting Council for their lack of professional competence in the 2009 and 2010 audits of AssetCo.
The FRC announcement was the culmination of a three-year investigation into the AssetCo affair and resulted in a severe reprimand and £2.4m in fines (plus £200,000 costs), while Napper has been excluded from the ICAEW for three years and fined £130,000.
The regulatory watchdog brought 12 allegations of misconduct against the audit firm and its partner, which they admitted in an agreed settlement. Fuller details of the case will appear on AccountingWEB shortly.
FRC executive counsel Gareth Rees QC commented, “The respondents have admitted widespread and significant failings in their audit work, and GT specifically has accepted there were serious failings in the execution of certain aspects of the firm’s quality control procedures. This misconduct is rightly reflected in the seriousness of the sanctions.”
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Election Lowdown: Conservatives hint tax rises
The Conservative party has played down speculation that it intends to raise taxes if they win the general election after the Chancellor suggested that there should be “flexibility to manage the system”.
Party sources told the BBC that Philip Hammond wasn’t hinting at tax rises. However, Hammond had been somewhat handcuffed by the party’s previously pledges which caused the government’s spectacular Class 4 NIC Budget U-turn.
In an interview with the BBC on Thursday, Hammond said: "All chancellors would prefer to have more flexibility in how they manage the economy and how they manage the overall tax burden down [rather] than having to have their hands constrained."
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Fujifilm investigates accounting practices
Fujifilm has postponed the release of its earnings report after the company found accounting irregularities at its New Zealand sales subsidiary.
The delay caused shares in the Japanese company to sink 3% on Friday. According to the FT, Fujifilms has enlisted a three member panel, which includes external lawyers and accountants, to investigate the issue.
The company said in a statement: “It became necessary to review certain accounting practices at Fuji Xerox New Zealand, such as the recording and recoverability of receivables related to certain sales leasing transactions.” The company had investigated the New Zealand subsidiary in 2015 after its auditor, KPMG Azsa, flagged some “accounting questions”.
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Intuit boss reveals company's vision
Intuit’s Brad Smith featured in a Telegraph story yesterday, in which he described the company’s vision as making “the things that we do for you basically disappear”.
The Telegraph described Smith as looking “more like an American life coaching guru or Hollywood film star” than the boss of an accounting software company. In the interview, the company chairman explained the opportunities ahead for Intuit: “What’s interesting is that in the US only about 8% of the population have adopted accounting software for small businesses; in the UK, that figure is 24%.
“Our biggest rival in the small business market is a shoebox full of receipts or an Excel spreadsheet. But now with the cloud and the platform shift, businesses need to be using something.”
Smith later in the article explained that the tipping point for cloud adoption has already been passed thanks to millennials wanting to “have access to everything on all their devices from the cloud.”
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