On Thursday, UK’s accounting watchdog said that it had charged Deloitte LLP for more than 900,000 pounds ($1.09 million) over its audits of building materials supplier SIG plc for the 2015 and 2016 financial years.
The penalty of 1.25 million pounds which was reduced to 906,250 pounds was levied on Deloitte LLP by the Financial Reporting Council (FRC) after the company admitted breaches over its work on SIG’s financial statements.
Deloitte LLC was reprimanded by the commission, ordering it to take action prevent the breaches from happening again. It also fined Deloitte audit engagement partner Simon Manning 50,000 pounds, reduced to 36,250 pounds, after he also admitted the breaches.
According to the FRC, both Deloitte and Manning admitted two breaches in relation to the audit of supplier rebates – incentives paid to SIG by its suppliers – and cash.
The FRC further added, “They failed to obtain and document audit evidence over the testing of rebate terms and the testing of rebate debtor balances, it said. They also failed to exercise sufficient professional scepticism by not investigating signs that the balances of rebate debtors may have been overstated.”
Both Deloitte and Manning cooperated with the FRC’s investigation, it said.
“We are disappointed that our work on the FY15 and FY16 SIG plc audits – relating to the audit of supplier rebates and cash – fell short of the high standards expected of us,” a Deloitte UK spokesperson said. “We have learnt from the matters identified by the FRC and remain committed to audit quality and its continuous improvement.”