Back to more serious issues after my last blog post on selecting a Prime Minister. The FRC have issued penalties against Grant Thornton for their audit work at Sports Direct in 2015-16 and 2017-18. One concern was about the failure to recognise that contracts with a delivery company were probably “related party” transactions.
To quote from the FRC announcement: “The audit failings in this case were serious and relate to fundamental auditing standards. It is particularly important that auditors follow up with due rigour where they have identified potential related party transactions as a significant audit risk. Auditors must adopt a mindset of professional scepticism, and exercise good judgment based on sufficient and properly documented evidence. The package of financial and non-financial sanctions imposed by the FRC on the auditors in this case will help to drive improvements at the firm and the wider industry.”
See https://www.frc.org.uk/news/july-2022/sanctions-against-grant-thornton-uk-llp-and-philip for more information.
This is of course not the first time Grant Thornton has been involved in defective audits – see the cases of Patisserie Valerie and Globo for example.
Grant Thornton may be more careful in future but as I keep on saying, even audited accounts cannot be trusted at present. I don’t think that will change until the penalties for failed audits are made larger and the penalties for errant directors who publish misleading accounts made a lot more severe.
Roger Lawson (Twitter: https://twitter.com/RogerWLawson )
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