Source: Sharecast
The Financial Reporting Council (FRC) said the fine had been cut from £3m for admissions and early disposal, but it criticised Grant Thornton for failing to comply with ethical standards and requirements between 2014 - 2017.
The watchdog also found that Grant Thornton lost its independence in its audit of Conviviality during the financial year which ended on April 30, 2014.
The FRC said that the accountancy firm had admitted breaching audit standards and agreed to a package of measures to improve the quality of future audits, including setting up an ethics board to oversee compliance.
Ethics failures were repeated and over three years, resulting in numerous breaches of standards and requirements by the firm’s partners and staff, the FRC said.
Grant Thornton had provided an unqualified or clean audit opinion to Conviviality in circumstances where the threats to independence were such that it should have resigned from the engagement, it added.
FRC deputy executive counsel Claudia Mortimore said there were “firm-wide failures over a number of years which not only led to numerous breaches of such requirements on individual audits but also the real risk of more such breaches which have not been, and will never be, reported or identified”.
Conviviality collapsed in spring 2018 and its retail division, including chains Wine Rack and Bargain Booze, was sold off in a so-called “pre-pack” administration process.
Grant Thornton has in the past come under fire from the FRC over its “unacceptable” work for the collapsed cake and cafe chain Patisserie Valerie, which is being investigated for alleged accounting fraud.
The regulator also said half of the eight Grant Thornton audits it inspected for 2017-18 required significant improvement.
The firm was fined £650,000 in December 2019 for breaches in its audit of a company that the FRC declined to name.
The industry’s “big four” have been told they have four years to ring fence their audit divisions from the rest of their operations, after the scandals involving high-profile corporate collapses such as government outsourcing contractor Carillion.
KPMG, PwC, Deloitte and EY have until June 2024 to separate their auditing divisions.
