Additionally, the regulator found failures regarding communication with the audit committee, in their financial statements disclosures, and in the preparation of audit documentation.
After the 30 per cent reductions in the fines for admissions and early disposal, and an additional 10 per cent reduction for EY due to “mitigating factors”, the final sums stood at £2,205,000 for EY and £70,000 for Harvey.
Claudia Mortimore, deputy executive counsel to the FRC, said: “The audit failings in this case were extensive and related to a number of fundamental auditing standards including the requirement to obtain sufficient appropriate audit evidence, adequately evaluate expert evidence, apply sufficient professional scepticism and challenge management, and prepare proper audit documentation.
“The sanctions imposed reflect the seriousness of the breaches and are intended to improve the quality of future audits.”
An EY spokesperson said: “Audit underpins trust and confidence in the economy and delivering high-quality audits is an absolute priority for us. Regrettably, on this occasion, we fell short of the standards we set for ourselves, and the standards expected of us by the FRC and society.
“We have cooperated with the FRC throughout their investigation, take their findings very seriously and have worked hard to rectify the issues identified. No findings were raised in the FRC’s review of our most recent audit of the company, for the 2020 year-end.”
"EY continues to make significant investments” in audit quality, the spokesperson said, and added that the company remains “committed to working with the FRC and other stakeholders to enhance standards across the audit profession, and to ensure the UK’s corporate governance and audit framework remains world leading”.
Benjamin Mercer is a reporter at FTAdviser's sister publication Pensions Expert
