FRC to fine Deloitte £440k over 2018 audit
November 23, 2022
The Financial Reporting Council’s Audit Quality team has issued a notice of a proposed sanction on Deloitte, proposing a regulatory penalty of £440k after it was determined that the Big Four firm failed to comply with the auditing framework in its audit of a listed company’s 2018 financial statements.
It is reported that the £440k penalty has been adjusted by a discount of 25% for “cooperation and mitigation”, and has therefore been rounded down to £330k.
The sanction has been accepted by Deloitte, while the committee has also accepted written undertakings proposed by the accountancy firm.
According to the FRC, it found serious failings in the reviewed audit, which demonstrated a “significant departure from the standards expected of a registered auditor”.
On further investigation, it was found that the firm breached four auditing standards in the 2018 audit, which included breaches in the areas of professional scepticism, a failure to obtain sufficient appropriate audit evidence, evaluation of the reasonableness of management estimates and significant assumptions, as well as the going concern basis of accounting.
However, the committee also acknowledged that Deloitte provided co-operation at an early stage and took “appropriate remedial steps” once the failings were identified.
A spokesperson for Deloitte said: “We regret and accept that certain aspects of our 2018 audit fell short of the standards expected. We continue to invest significantly in our audit processes and training and are committed to continuing to improve to ensure we consistently deliver high quality work.”