Outcome of disciplinary case against Grant Thornton UK LLP, Alastair Nuttall and Marcus Swales
08 July 2015
The Financial Reporting Council (FRC) announces the outcome of the disciplinary case in connection with Grant Thornton UK LLP (Grant Thornton), Alastair Nuttall and Marcus Swales, Audit Engagement Partners in relation to Manchester Building Society.
Settlements agreed amongst the Executive Counsel to the FRC, Gareth Rees QC, Grant Thornton, Alastair Nuttall and Marcus Swales have been approved by a legal member of the FRC Tribunal. Those concerned admitted that their conduct fell significantly short of the standards reasonably to be expected of a Member Firm and Member as set out in the Particulars of Fact and Acts of Misconduct.
Following an investigation under the Accountancy Scheme into the fair value hedge accounting and auditing of interest rate swaps and related mortgages at Manchester Building Society, which gave rise to a prior period adjustment in its financial statements for the year ended 31 December 2012, the parties agreed the following terms of settlement:
A Fine of £975,000 in respect of Grant Thornton;
Grant Thornton to receive a Severe Reprimand;
A sum of £85,000 to be paid by Grant Thornton as a contribution to the Executive Counsel’s costs;
A Fine of £39,000 in respect of Mr. Nuttall;
Mr. Nuttall to receive a Reprimand;
A Fine of £45,500 in respect of Mr. Swales;
Mr. Swales to receive a Severe Reprimand.
Paul George, FRC Executive Director of Conduct said:
“This outcome sends a clear message to accountants and accountancy firms involved in the audit of hedge accounting of their responsibility to carry out professional work diligently and in accordance with the applicable technical standards. These results demonstrate our commitment to ensure the standards of the profession are upheld so that it can justifiably secure public confidence.”
Read or download the Settlement Agreement: Grant Thornton (PDF) and Particulars of Facts and Acts of Misconduct: GT, AN, MS (PDF)
Notes to editors:
- The FRC is responsible for promoting high quality corporate governance and reporting to foster investment. We set the UK Corporate Governance and Stewardship Codes as well as UK standards for accounting, auditing and actuarial work. We represent UK interests in international standard-setting. We also monitor and take action to promote the quality of corporate reporting and auditing. We operate independent disciplinary arrangements for accountants and actuaries; and oversee the regulatory activities of the accountancy and actuarial professional bodies.
- In relation to disciplinary matters, the FRC is the independent, investigative and disciplinary body for accountants and actuaries in the UK dealing with cases which raise important issues affecting the public interest. In brief, the stages of the disciplinary process are:
- Decision to investigate
- Decision whether to bring disciplinary proceedings against Member Firm or Member and, if so decided, referral to Disciplinary Tribunal
- Tribunal hearing
- Determination and imposition of sanction and/or costs orders
- The FRC can start a disciplinary investigation in one of two ways: (i) the professional bodies can refer cases to the FRC; and (ii) the FRC may decide of its own accord to investigate a matter. The Conduct Committee will consider each case identified or referred to it and decide whether or not the criteria for an investigation are met.
- Investigations are conducted by Executive Counsel and the Professional Discipline team within the Conduct Division. If disciplinary proceedings are commenced, Executive Counsel delivers a complaint to the Conduct Committee. The Conduct Committee then instructs the Convener to appoint a Disciplinary Tribunal.