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UK watchdog fines Deloitte over SIG audit
Global Banking & Finance Review®
Company
By Tom Wilson
LONDON (Reuters) -Britain’s accounting watchdog said on Thursday it had fined Deloitte LLP 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 Financial Reporting Council (FRC) said it had imposed a penalty of 1.25 million pounds on Deloitte LLP, reduced to 906,250 pounds after it admitted breaches over its work on SIG’s financial statements.
The FRC reprimanded Deloitte, 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.
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 said.
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, the FRC added.
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.”
Reuters could not reach Manning for comment.
($1 = 0.8258 pounds)
(Reporting by Tom Wilson; Editing by Danilo Masoni and Mark Potter)
An audit is an official inspection of an organization's accounts, typically by an independent body, to ensure accuracy and compliance with established standards and regulations.
Financial reporting involves the disclosure of financial results and related information to management and external stakeholders, providing insights into a company's financial performance and position.
Supplier rebates are incentives paid by suppliers to customers, often based on the volume of purchases, aimed at encouraging customer loyalty and increasing sales.
Professional skepticism is an attitude that includes a questioning mind and a critical assessment of audit evidence, essential for auditors to ensure the reliability of financial statements.
A financial penalty is a monetary charge imposed on an individual or organization for violating laws or regulations, often as a form of punishment or deterrent.
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