Accountants fined £1.8m

ERNST & Young has been fined £1.8m by Britain’s accounting watchdog for failures in its audit of a tech company.

The Financial Reporting Council (FRC) said the fine was linked to the firm’s audit of Tech Data Limited for the year to January 31, 2012, which fell ‘significantly short’ of standards.

It came after the regulator launched a probe in 2014.

The FRC said yesterday that Ernst & Young (EY) and Julian Gray, a senior statutory auditor and partner, had been fined and reprimanded. Gray was fined £90,000, a figure cut to £59,000 for ‘mitigating factors’. A proposed fine of £2.75m on EY was also discounted to £1.8m for similar reasons, and it will pay £225,000 towards costs.

The watchdog said the audit of Tech Data failed standards in three areas, including ‘failures to obtain reasonable assurance about whether the financial statements as a whole were free from material mis- statement, failures to obtain sufficient appropriate audit evidence and failures to exercise sufficient professional scepticism’. It comes as the Britain’s big four accountancy firms – KPMG, Deloitte, PwC and EY – are under the spotlight after a number of scandals.

KPMG is facing criticism for its work for HBOS nearly a decade ago, despite being cleared of misconduct by the FRC. PwC is also being probed for its audit of scandal-ridden BT Italia, where accounting irregularities led to a £530m writedown this year.

Tech Data, which sells technology and logistics services to businesses, did not respond to a request for comment.