News June 2014 Investigation into the conduct of Baker Tilly Audit UK Audit LLP, Richard King and Steven Railton re

Investigation into the conduct of Baker Tilly Audit UK Audit LLP, Richard King and Steven Railton relating to the audit of Tanfield Group plc.

11 June 2014

PN 37/14

The Financial Reporting Council’s Executive Counsel has delivered a disciplinary Formal Complaint in connection with the conduct of Baker Tilly Audit UK Audit LLP (‘Baker Tilly’), Richard King and Steven Railton (the ‘Respondents’) in relation to their engagement to audit the financial statements of Tanfield Group plc and its subsidiaries for the year ended 31 December 2007.  Baker Tilly is a member firm of ICAS, Mr King is a member of the ICAEW and Mr Railton is a member of ACCA.

The Complaint alleges that the conduct of Baker Tilly, Mr King and Mr Railton fell significantly short of the standards reasonably to be expected of  Members and Member Firms in that they failed to act in accordance with the Fundamental Principle of their professional bodies’ Codes of Ethics requiring them  to act with professional competence and due care.  The Complaint was delivered following Executive Counsel’s investigation into the Respondents’ conduct and his conclusion that in each case there is a realistic prospect that a disciplinary tribunal will make an adverse finding against the Respondent and that a disciplinary hearing is desirable in the public interest.

The FRC announced in November 2010 that it would investigate the preparation, approval and audit of the financial statements of Tanfield Group plc for the years ended 31 December 2007 and 2008. Following the conclusion of that investigation no further action will be taken in respect of the 2008 financial statements. The formal complaint concerns the audit of significant balance sheet items in the 2007 financial statements.

An independent Disciplinary Tribunal will be appointed to hear the Formal Complaint.
Notes to editors:

  1. 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.
  2. 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
    • Investigation
    • 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
  3. 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.
  4. 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.