Auditor Regulatory Sanctions

Published: 2 October 2023

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Sanctions imposed under the Auditor Regulatory Sanctions Procedure.

January 2022

Pursuant to the Auditor Regulatory Sanctions Procedure, and following an inspection by the Financial Reporting Council (FRC)’s Audit Quality Review (AQR) team, the FRC’s Enforcement Committee (the Committee) determined on 22 October 2021 that Mazars LLP had failed to comply with the Regulatory Framework for Auditing in its audit of a local government authority’s 2019 financial statements. The most significant failing was in respect of the PPE valuation, where there was insufficient and undocumented challenge of the accounting treatment for refurbishment costs in the valuation of the authority’s dwellings which could indicate a material overvaluation. Other areas of concern included the first-year independence, group oversight and quality control. The Committee considered that it is necessary to impose a Sanction to ensure that Mazar’s Local Audit Functions are undertaken, supervised and managed effectively. The Sanction proposed by the Committee, and accepted by Mazars LLP, was a Regulatory Penalty of £314,000 adjusted by a discount of 20% for co-operation and admissions to £250,000. In addition, the Committee accepted written Undertakings given by Mazars. The FRC’s AQR will monitor compliance with the Undertakings and report to the FRC’s Supervision Committee and the relevant RSB as appropriate.

November 2013

The Financial Reporting Council’s Monitoring Committee have determined the following sanctions under the provisions of the Auditor Regulatory Sanctions Procedure, November 2013.

Pursuant to the Auditor Regulatory Sanctions Procedure, and following an inspection by the Financial Reporting Council (FRC)’s Audit Quality Review (AQR) team, the FRC’s Monitoring Committee determined on 10 November 2014 that Ernst & Young LLP had failed to comply with the Regulatory Framework for Auditing in its audit of an entity’s 2013 financial statements. The Sanctions proposed by the Monitoring Committee, and accepted by Ernst & Young LLP, were a condition that Ernst & Young LLP complete by 28th February 2015 specified actions designed to improve the performance of future audits, and a Regulatory Penalty of £52,500.

Pursuant to the Auditor Regulatory Sanctions Procedure, and following an inspection by the Financial Reporting Council (FRC)’s Audit Quality Review (AQR) team, the FRC’s Monitoring Committee determined on 14 January 2015 that Mazars LLP had failed to comply with the Regulatory Framework for Auditing in its audit of an entity’s 2013 financial statements and was liable to sanctions. The Sanctions proposed by the Monitoring Committee, and agreed by Mazars LLP, were a condition that Mazars LLP complete by 31 March 2015 agreed actions designed to ensure the effective performance of future audits, and a Regulatory Penalty of £10,400.