LONDON – The Financial Reporting Council (FRC) fined auditors Ernst & Young (EY) £2.75 million for alleged misconduct in relation to a 2011/12 audit of Tech Data.
The FRC fined and reprimanded both EY and senior auditor Julian Gray after both admitted misconduct in auditing the computer and communications wholesaler’s books.
Both admitted their conduct “fell significantly short of the standards reasonably to be expected,” the FRC said in a statement.
Misconduct was admitted in three audit areas, including failing to obtain sufficient appropriate evidence as part of an audit and failing to exercise sufficient professional skepticism.
The FRC initially reprimanded and fined EY £2.75 million, although this was reduced to £1.8 million since the firm agreed to a settlement and other “mitigating factors.” Gray was reprimanded and fined £90,000, which was reduced to £59,000 on the same basis.
EY has also been told to pay £225,000 towards the Executive Council’s costs.
An investigation into the Tech Data audit by the Executive Council of the FRC was announced in August 2014.
“Audit quality is an ongoing focus and priority to EY, however we recognise that we fell short of our professional standards on three matters in relation to the audit of Tech Data Limited (formerly Computer 2000 Distribution Limited) for the financial year ending 31 January 2012,” EY told the Financial Times in a statement.