News July 2020 FRC announces sanction against audit Senior Manager

FRC announces sanction against audit Senior Manager

08 July 2020
The Financial Reporting Council (FRC) has imposed a Severe Reprimand on Natasha Toy, a former Senior Manager (the Senior Manager) at Grant Thornton UK LLP (the Firm) in respect of Misconduct relating to the audit of the financial statements of Conviviality Retail Plc (the Company) for the year ended 30 April 2014 (the Audit).
The Senior Manager, who was initially part of the audit team assigned to the Audit, was seconded to the Company to assist with the preparation of its year-end financial statements.  This was contrary to requirements of standards designed to preserve the independence and objectivity of audit, given the threats to the Firm’s independence such circumstances posed. 
The Senior Manager transferred, and subsequently sought to remove, a four and a half hour time entry she had originally recorded on the Audit file.  She did this in order to conceal evidence of her involvement in both the Audit and subsequently the preparation of the Company’s accounts, being aware of the threats to independence which those matters had created.
The sanction imposed takes into account that the Senior Manager was acting under the instruction of the Audit Engagement Partner in transferring the time and that she believed she was following his instruction in attempting to subsequently remove the entry.  The FRC also recognises Ms Toy’s hitherto unblemished disciplinary record, her genuine contrition for the Misconduct and the exceptional level of cooperation she demonstrated during the course of the investigation.
The Settlement Agreement and Particulars of Fact and Acts of Misconduct, edited for publication, are published here.
Notes to editors:
  1. The FRC’s purpose is to serve the public interest by setting high standards of corporate governance, reporting and audit and by holding to account those responsible for delivering them. The FRC sets the UK Corporate Governance and Stewardship Codes and UK standards for accounting and actuarial work; monitors and takes action to promote the quality of corporate reporting; and operates independent enforcement arrangements for accountants and actuaries. As the competent authority for audit in the UK the FRC sets auditing and ethical standards and monitors and enforces audit quality.
  1. Past FRC Enforcement Outcomes can be found here.
  1. 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 under the Accountancy Scheme are:
  • Decision to investigate
  • Investigation
  • Decision whether to bring enforcement 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
Under the Accountancy Scheme 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.
The criteria are specified in paragraph 5(1) of the Accountancy Scheme. A Member or Member Firm shall be liable to investigation under this Scheme only where, in the opinion of the Conduct Committee the matter raises or appears to raise important issues affecting the public interest in the United Kingdom and there are reasonable grounds to suspect that there may have been Misconduct or it appears that the Member or Member Firm has failed to comply with any of his or its obligations under paragraphs 14(1) or 14(2) of the Scheme.
Investigations are conducted by Executive Counsel and the Enforcement division.
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