Not Grant Thornton’s FINEst work: the accountancy firm receives a £4m fine
October 8, 2021
2 min read
What's going on here?
The accountancy firm Grant Thornton has received a fine of £4 million for its failures in the audits for Patisserie Valerie, which collapsed in 2019 after an accounting scandal.
What does this mean?
Due to Grant Thornton’s failure to notice fraud on the books of Patisserie Valerie, the Financial Reporting Council (FRC) has hit the firm with a fine. The fine has since been reduced to £2.34 million after the firm admitted wrongdoing and provided extensive cooperation with the FRC’s investigation. The audit director, David Newstead, has also been fined for his role in signing off the accounts and has received a three year ban in relation to carrying out high-level audits.
What's the big picture effect?
Only two years ago, Grant Thornton was fined £650,000 over another less than perfect audit of a listed company. As Britain’s sixth largest accountancy firm, the emergence of yet another string of errors in relation to Patisserie Valerie raises questions about the firm’s competency. Although, the fine is relatively low when compared with the double-digit sums that bigger accountancy firms have paid out after corporate collapses. Not only has Grant Thornton been investigated by the FCR, there had previously been a civil case launched against the firm by the liquidators of Patisserie Valerie, claiming that the auditor was negligent. Grant Thornton began auditing the company back in 2007 but it was in 2018 when the cake chain discovered fraud on its books. This led to the collapse of Patisserie Valerie in 2019, which resulted in the loss of 900 jobs. Grant Thornton recognises that there were shortcomings in its audit work but has dismissed these claims as failing to accept the management’s own shortcomings. As a result of the civil claim, Grant Thornton has increased investment in its audit practice to ensure better quality. It is also hoped that these sanctions imposed by the FCR, which include non-financial measures, will improve the quality of future audits. Therefore, it is a rather expensive lesson to learn for Grant Thornton and a mistake which they will not wish to repeat any time soon.
Report written by Imogen Wilson
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