Deloitte has been handed a heavy fine by the Financial Reporting Council (FRC) over failings in relation to its 2015 and 2016 audits of building materials supplier SIG plc, according to Accountancy Age news report.
Following a four-year investigation, the Big Four firm admitted two major breaches of FRC standards. The watchdog responded with a series of sanctions, including a £1.25m fine, a severe reprimand, and an order for Deloitte to take action to prevent future breaches.
The breaches “involved contraventions of requirements which are fundamental to the role of the independent auditor”, said Jamie Symington, deputy executive counsel at the FRC.
According to the audit regulator, the misdemeanours concerned the audit of supplier rebates (incentives paid to SIG by its suppliers) and cash.
Deloitte failed to “obtain and document sufficient appropriate audit evidence” and “exercise sufficient professional scepticism” in both cases, the FRC said.
Symington added that the supplier rebate breaches were made “all the more serious” by the fact that the FRC had highlighted the arrangements as requiring particular attention from auditors.
The audit watchdog also levelled sanctions at Simon Manning, the statutory auditor for the 2015 and 2016 SIG audits, and signatory of the audit reports on behalf of Deloitte.
