LONDON (ShareCast) - (Sharecast News) - The accounting regulator has fined Grant Thornton £3.0m for misconduct over the firm's audits of Nichols and Salford University.


The Financial Reporting Council gave Grant Thornton a severe reprimand, imposing fines and censuring three of its senior auditors. It also excluded a former senior partner, Eric Healey, from the Institute of Chartered Accountants for five years and fined him £200,000.

Grant Thornton's misconduct involved Healey joining the audit committees of Nichols, which makes Vimto, and Salford University. At the time both organisations were Grant Thornton audit clients and Healey was engaged by the firm under a consultancy agreement.

This created "serious familiarity and self-interest threats" and meant eight audits from 2010 to 2013 were not independent. Grant Thornton's fine was reduced to £3.0m from £4.0m for settling. The firm, the UK's fifth largest accountancy practice, will also pay £165,000 in costs.

Healey has admitted aspects of his conduct were reckless and fell well short of required standards. The FRC fined Kevin Engel £75,000, David Barnes £52,500 and Joanne Kearns £45,000. The Grant Thornton auditors' fines were all reduced because they settled.

"Grant Thornton, Mr Engel, Mr Barnes and Ms Kearns have admitted that their conduct fell significantly short of the standards reasonably to be expected of a member firm and members [of the accountancy profession]," the FRC said.

The regulator said the case also "revealed widespread and serious inadequacies in the control environment in Grant Thornton's Manchester office" and faulty policies and procedures across the firm for retiring partners.

The FRC's action against Grant Thornton is the latest in a string of penalties meted out by the under-pressure regulator.

Westminster has set up an independent review of the FRC's role and powers after MPs accused it of being toothless.

The accountancy profession is also under political scrutiny after audits of Carillion, HBOS and BHS failed to spot problems before the companies collapsed.

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