Sanctions against Grant Thornton UK LLP

News types: Investigations

Published: 8 April 2024

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 (Committee) has concluded that Grant Thornton UK LLP failed to comply with the Regulatory Framework for Auditing in its audit of a local authority’s pension fund for the year ended 31 March 2021.

The Committee found failures in the reviewed audit, which it considered represented a significant departure from the standards expected of a Registered Auditor and had the potential to affect the public, employees, pensioners or creditors. These included two uncorrected material errors which appeared in the version of the pension fund’s audited financial statements that was included in the local authority’s annual report (these errors did not appear in the pension fund’s own financial statements) and insufficient audit evidence obtained that the value of investments was materially accurate.

The Committee considered that it is necessary to impose a Sanction to ensure that Grant Thornton UK LLP’s Local Audit Functions are undertaken, supervised and managed effectively. The Committee issued a Notice of Proposed Sanction proposing a Regulatory Penalty of £50,000, adjusted by a discount of 20% for co-operation and other mitigating factors to £40,000. The Sanction has been accepted by Grant Thornton UK LLP.

In addition, the Committee has accepted written Undertakings proposed by Grant Thornton UK LLP, and the FRC will monitor compliance with the Undertakings.

The Committee acknowledges that Grant Thornton UK LLP provided co-operation, including at an early stage, took appropriate remedial steps promptly once the failing was identified and demonstrated contrition. There was also no evidence to support financial gain or benefit from the failure.

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