Britain’s accounting watchdog said on Monday it was sanctioning accounting firm Grant Thornton and one of its partners David Newstead over their audit of Patisserie Valerie, the cafe chain that collapsed in 2018 following accounting irregularities.
The Financial Reporting Council (FRC) said it was fining Grant Thornton £4 million, although that would be cut to £42.34 million due to mitigating factors, as well as imposing a series of non-financial measures to improve its procedures. Mr Newstead was to be fined £150,000, falling to £87,750, due to mitigating factors.
The FRC said Grant Thornton’s audits during 2015, 2016 and 2017 missed “red flags” and involved a failure to stand back and challenge management.
“We regret the quality of our work fell short of what was expected of us in this instance,” Grant Thornton said in a statement.
“Since the period in question, we have invested significantly in our audit practice to better ensure consistent quality and have started to see the material outcome of this investment,” it added.