Accounting firm Grant Thornton has been fined for failing to comply with the Regulatory Framework for Auditing in its audit of an unnamed local authority pension fund in 2020/21.

The Financial Reporting Council (FRC) fined the company £40,000 after finding failures in the reviewed audit that it said represented “a significant departure” for the standards expected of a registered auditor, which had the potential to affect the public, employees, pensioners or creditors.

I had initially issued a Notice of Proposed Sanction proposing a regulatory penalty of £50,000, but this was adjusted down by 20 per cent due to Grant Thornton’s co-operation and other mitigating factors.

The sanction has been accepted by Grant Thornton.

The FRC found that the audit failings included two uncorrected material errors that appeared in the pension fund’s audited financial statements included in the local authority’s annual report, but not in the pension fund’s own financial statements.

Additionally, its investigation deduced that the accounting firm had not obtained sufficient audit evidence to ensure the value of the pension fund’s investments was materially accurate.

The committee therefore decided it was necessary to impose the sanction to ensure that Grant Thronton’s local audit functions are undertaken, supervised and managed effectively.

It has accepted written undertakings proposed by the accounting firm and will monitor its compliance with these undertakings.

“The committee acknowledges that Grant Thornton UK LLP provided co-operation, including at an early stage, took appropriate remedial steps promptly once the failing was identified and demonstrated contrition,” the FRC noted.

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

In a statement, 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.”

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