UK’s audit watchdog, the Financial Reporting Council (FRC), has fined Ernst & Young £2.75 million for alleged misconduct relating to the accounting group’s review of financial statements of Tech Data Limited.
The FRC said in a statement Monday that it reprimanded and fined EY after the company admitted to “misconduct” in the audit of Tech Data Limited’s financial statements for the financial year ending in 2012.
Tech Data, which is a wholesaler to the computer and mobile communications industries, disclosed late in 2013 that it found “significant accounting irregularities” that led to “improper accounting” in its previous year’s financial statements, according to a filing it made with Companies House.
As a result of the accounting problems, Tech Data was forced to decrease its 2012 operating profits by £8.95m, to £5.47m, the filing showed. Julian Gray of EY had signed off as the auditor of the initial financial statements.
Gray was also hit with a reprimand and fine of £90,000 after admitting to the misconduct, which was reduced to £59,000 adjusting for mitigating factors and a discount for settlement, the FRC said. EY’s fine was also reduced for the same reason to £1.8m; the accounting group will also pay a £225,000 to the FRC’s investigation costs.
The FRC is the UK’s independent regulator responsible for promoting transparency and integrity in business. It sets the UK Corporate Governance and Stewardship Codes and UK standards for accounting and actuarial work; monitors and takes action to promote the quality of corporate reporting; and operates independent enforcement arrangements for accountants and actuaries.