Grant Thornton fined for ‘serious failings’ in Sports Direct audits

Grant Thornton will pay a £ 1.3m fine for “serious failures” in his criticism of retailer Sports Direct, the accounting regulator said on Monday.

The findings referred to Grant Thornton’s audit of the sports product chain, now Frasers Group, for the financial years 2015-16 and 2017-18 and to the work of Philip Westerman, the partner responsible for the audits. Westerman, now a former partner of the UK Comptroller, is facing a fine of almost £ 80,000.

The critic and Westerman were severely reprimanded for their handling of the two-year reviews. Grant Thornton will have to report to the Financial Reporting Board on her work to improve auditing standards.

The findings referred to the firm’s or Westerman’s failure to establish that Shipping Company A, a group involved in many of Sports Direct’s transactions, was a related party.

The regulators’ chief adviser did not determine if there was a related party deal, Monday’s statement said.

The FRC said that while the respondents identified related parties as an “area of ​​significant risk” for the audit, they did not refer with “professional skepticism” to the management’s determination that Shipping Company A is not a related party of Sports Direct.

“There were a number of relevant factors that should have prompted the respondents to consider and monitor matters, but they did not,” the council said.

The findings against the firm and Westerman touched on “basic and important requirements” that were “fundamental to an auditor’s work,” the FRC said.

“As a result of the adverse findings, both the 2016 and 2018 audits failed in their primary purpose of providing reasonable assurance that the 2016 and 2018 financial statements were free from material misstatement,” the council said.

The penalties against Westerman total £ 79,575.

Grant Thornton said he was happy to end “the long-running affairs.”

“Having invested significantly in the quality of our audits since that time, we have seen a marked improvement in our results and are confident that the problems identified by the FRC investigations… Do not reflect the work we are producing today,” it read.

Grant Thornton fined for ‘serious failings’ in Sports Direct audits Source link Grant Thornton fined for ‘serious failings’ in Sports Direct audits

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