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Written question asked by Lord Sikka (Labour) on Wednesday, 10 November 2021, in the House of Lords. It was due for an answer on Wednesday, 24 November 2021. It was answered by Lord Callanan (Conservative) on Monday, 22 November 2021 on behalf of the Department for Business, Energy and Industrial Strategy.

Interserve: Audit

Question

To ask Her Majesty's Government what proportion of the fines levied by the Financial Reporting Council on Grant Thornton and its partner for audit failures at Interserve will be retained by HM Treasury; and what proportion will be distributed to stakeholders negatively affected by those failures.

Answer

The FRC undertook the investigation into the audit of Interserve under its Audit Enforcement Procedure (AEP), the regime applicable to statutory audit investigations since 2016. All fines imposed under the AEP are paid into HM Treasury’s consolidated fund in line with the general principles applying to the treatment of fines or other penalties imposed by public bodies in central government.

In this case, the fine imposed on Grant Thornton LLP amounted to £1.3 million. This was adjusted for mitigating factors and admissions / early disposal, in line with the FRC’s published Sanctions Policy for AEP cases, to £718,250. The fine imposed on Simon Lowe, the audit engagement partner, was £70,000. This was adjusted for mitigating factors and admissions / early disposal to £38,675.

The £467,780 costs recovered have been paid to the Institute for Chartered Accountants in England and Wales (ICAEW), as the Recognised Supervisory Body (RSB) who paid for the investigation. (In accordance with paragraph 20ZA, Schedule 10 of the Companies Act 2006, the RSB, which has approved the persons as eligible for appointment as statutory auditors must pay the costs of the investigation).

There is no provision under the AEP for any proportion of fines or successfully reclaimed costs to be paid to any negatively affected stakeholders.

Secondary information

Type
Written question
Reference
HL3965
Session
2021-22
Subjects
Audit Fines Grant Thornton Interserve
Contains statistics
Yes
Link
View this Written question on www.parliament.uk