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(Alliance News) - Grant Thornton UK LLP has been fined by the UK Financial Reporting Council over its audit of failed support services company Interserve PLC, the accounting firm's second set of sanctions in the past two months.
The FRC imposed sanctions on Grant Thornton that include a GBP1.3 million fine that was reduced to GBP718,250. The regulator also issued the auditor with a 'severe reprimand' and will require Grant Thornton to report to it on its monitoring programme of the quality of audit work on loss-making contracts.
The sanctions relate to a loss provision made by Interserve against an energy-from-waste contract for the construction of a waste treatment facility. "There were serious evidence and scepticism failings by the auditors in respect of key judgements and accounting estimates relevant to the loss provision, an area identified as a significant risk in the audit," the FRC said on Monday.
However, the regulator stopped short of saying the breaches by Grant Thornton resulted in a material misstatement of Interserve's results.
Interserve collapsed into bankruptcy early in 2019 after shareholders rejected an equity raise to pay down crushing debt. Outsourcing firm Mitie Group PLC later bought Interserve's largest division, Interserve Facilities Management.
This is the second second set of sanctions imposed on Grant Thornton in as many months. At the end of September, the firm was fined GBP4 million, reduced to GBP2.3 million, over the audit of failed cake shop chain Patisserie Holdings PLC.
By Tom Waite; thomaslwaite@alliancenews.com
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