Regulator fines auditors over local authority pension fund failures

Audit firm Grant Thornton must pay a £40,000 penalty after the Financial Reporting Council (FRC) found failures in its audit of an unnamed local authority’s pension fund.

The FRC’s enforcement committee said the failures “represented a significant departure from the standards expected of a registered auditor and had the potential to affect the public, employees, pensioners or creditors”.

These included two uncorrected material errors which appeared in the version of the pension fund’s audited financial statements in the local authority’s annual report, although they did not appear in the pension fund’s own financial statements.

There had also been insufficient audit evidence found to show that the value of investments was materially accurate.

The committee imposed a penalty of £50,000, reduced to £40,000 due to the firm’s co-operation and other mitigating factors. It also accepted written undertakings proposed by Grant Thornton, which it will monitor.

“There was also no evidence to support financial gain or benefit from the failure,” the FRC said.

A Grant Thornton spokesperson said: “We note the findings of the regulator’s investigation, with which we have cooperated throughout, and regret the errors identified.

“As a leading provider of audit and related assurance services to the public sector, we remain committed to high-quality work and have taken steps to further improve this.”

Mark Smulian