The Financial Reporting Council (FRC) is responsible for investigations of possible audit failures in cases of major public interest. The FRC is aware of possible questions as to the audit work conducted at the Post Office during the period in which issues arose with the Fujitsu Horizon system and is continuing to monitor developments in this case.

The statement of requirements was published to 30 suppliers under CCS MCF3 – Lot 3 – Complex and Transformation, as part of the ITT that published to market. The statement of requirements was only available to the suppliers that were invited on our E-sourcing portal and therefore was not accessible by the wider public and only to the suppliers that were invited to bid.

The Ministry of Justice intends to release the information, and it will be completed within 30 days. An unredacted version of the statement of requirements shall be published on contracts finder.

Ministers have not met with the Securities and Exchange Commission in response to its fine against Ernst & Young.

The Financial Reporting Council (FRC) is an independent regulator and independently decides whether an investigation should be commenced. The recent fine imposed by the Securities and Exchange Commission (SEC) on Ernst & Young (EY) in the United States relates to the conduct of EY and its audit professionals in the United States. The FRC is responsible for oversight of the qualification of external auditors in the UK and meets regularly with the SEC and also the Public Company Accounting and Oversight Board in the United States to discuss issues of common interest. The FRC has written to the seven largest UK audit firms about the impact of this issue and has published that letter on the FRC website on 13 July 2022.

The Ministry of Justice awarded this contract to Ernst & Young for the provision of Consultancy and Professional Services to support the programme to deliver 3,000 new prison places through houseblock and Cat D construction. The contract award followed a competitive tendering exercise in accordance with MoJ’s Commercial Policy that best value for money is secured via competition.

Ernst & Young provided advice and assistance with programme initiation and are providing ongoing support including in specialist areas as required to deliver the programme outcomes on time.

HM Revenue and Customs (HMRC) cannot comment on individual cases. HMRC will investigate allegations of wrongdoing brought to their attention.

The Government is determined to tackle promoters and enablers of tax avoidance schemes and in March 2020, HMRC published their strategy for tackling promoters of tax avoidance schemes. The strategy outlines how HMRC will continue to take robust actions against promoters and enablers of tax avoidance.

Finance Bill 2021 includes new measures which will strengthen the existing anti-avoidance regimes and help HMRC act more swiftly against promoters. The Government has also announced a further package of measures to ensure promoters face stronger sanctions more quickly; the consultation was published on 23 March.

These proposals build on the enablers of defeated tax avoidance legislation that was introduced in 2017 and include provision for the publication of information, including the name of the enabler and the total number and amount of penalties incurred by the enabler, if they have been charged 50 or more penalties or £25,000 in penalties in any one year.

The Department recognises the financial and professional services sectors not only make an important contribution to the UK economy but also, as the report highlights, play an essential role in supporting and enabling firms in all sectors of the economy to trade internationally.

The Department welcomes the report and its recommendations which, as we develop our independent trade policy, challenge policy makers to treat goods and services together rather than as separate policy areas.

My Rt Hon Friend the Minister for Trade Policy, the member for Chelsea and Fulham, was guest speaker at the launch of the report on 24^th February 2021.

Within the last 18 months, the Permanent Secretary for the Department for Business, Energy and Industrial Strategy has had two meetings with Deloitte, two meetings with EY, two meetings with KPMG, and five meetings with PwC.

We are aware of this issue, affecting 19 local government bodies and, together with Public Sector Audit Appointments Ltd, are monitoring the situation. It is not acceptable for a professional services firm like EY to be unable to meet its contractual obligations to the statutory timetable and we expect the situation to be resolved as quickly as possible.

The forthcoming review of the local audit regime will consider the implications of our audit policy, including the timeliness of audit completion.

The Department has the following contracts with Ernst & Young:

The contract to support the Department of Health and Social Care Procurement Transformation Programme was let through an open Official Journal of the European Union procurement process. Both the PPRS Project 1 contract and the CP1 Finance Support contract were let through the Crown Commercial Service’s Management Consultancy Framework. This Framework has centrally agreed benchmarked rates to ensure value for money.

The Department monitors the supplier’s contract performance against agreed milestones and Key Performance Indicators. Regular contract review meetings are held with the supplier, during which performance is discussed. This includes regularly reviewing each contract to ensure it remains fit-for-purpose and value for money.

Ernst & Young (EY) were successful through a procurement process to deliver Phase 1 of the Grants Efficiency Accelerator, which aims to validate risk in general grants administration and realise efficiency savings. EY worked as part of a blended team with the Cabinet Office Grants Function and provided flexible access to the expertise and capabilities required to deliver this work at pace. This included fraud and data experts as well as economic data modelling and programme delivery specialists.

Due to the large volume of commercial and sensitive information that has been shared by the pharmaceutical industry throughout this work, the Department will be unable to publish the final report. However, we will consider publication of an executive summary of the work.

The Minister for Government Resilience and Efficiency (until 8 January 2018) and the Minister for Implementation (since 9 January) have had Ministerial responsibility for public procurement policy, including the strategic supplier risk management policy, but the responsibility for overseeing individual contracts with Carillion rests with individual contracting authorities.

In July 2017, Carillion engaged EY to assist with its restructuring plans. Government was not a party to this arrangement but we understand that EY’s recommendations were considered by Carillion’s board on 19 December.

The proposals from EY were put before the directors of Carillion, for their consideration and for them to act on accordingly, in line with their director duties. EY did not present this information to HMG. We were privy to the contents of the report after it had been presented to the Carillion Board, which enabled us to prepare for the various scenarios facing Carillion.

The decisions and conduct of the management of the company will be investigated by the Official Receiver.

The cost of the litigation will not be known until the parties have agreed on the amounts to be paid under a costs order made by the Court of Appeal. If the parties cannot agree, the Court will assess the amounts. The costs order does not apply to Ernst & Young which was not a party to the litigation.

It is not possible for HM Revenue and Customs (HMRC) to provide details of any action taken in connection with these organisations.

In the March 2015 Budget, the Government challenged the accountancy and tax professional bodies to improve how they deal with their members who promote tax avoidance schemes.

The professional bodies have responded positively to this challenge and are working with HMRC to agree a new standard to which their members will need to adhere.