Serious Audit Errors Lead to Hefty Fine
- Grant Thornton UK LLP fined £1.3m for serious failings in Sports Direct audit
- Philip Westerman receives £79,575 sanction
- Failures in 2016 and 2018 audits related to inventory provisions and website sales revenue
- Grant Thornton required to report on improvements in audit methodology
The Financial Reporting Council (FRC) has fined Grant Thornton UK LLP £1.3 million for serious failings in the statutory audits of Sports Direct International plc for the financial years ended 24 April 2016 and 29 April 2018. The firm’s former partner, Philip Westerman, received a sanction of £79,575. In the 2016 audit, Grant Thornton and Westerman failed to treat matters with professional scepticism in establishing that Delivery Company A, a group involved in many of Sports Direct’s transactions, as a related party. The FRC identified several factors that should have prompted further investigation but were not pursued. In the 2018 audit, there were failures concerning inventory provisions and website sales revenue. Grant Thornton must now report to the FRC on improvements made to its audit methodology and undertake thematic reviews. A spokesperson for Grant Thornton UK LLP stated that they have invested significantly in improving their audits since then, resulting in a marked improvement.
Factuality Level: 10
Factuality Justification: The article provides accurate information about the Financial Reporting Council’s fine on Grant Thornton UK LLP and Philip Westerman, details the specific failings in the audits of Sports Direct International plc for the years 2016 and 2018, and includes a statement from Grant Thornton acknowledging improvements made since then. It is objective and does not contain any irrelevant or sensational information.
Noise Level: 2
Noise Justification: The article provides a clear and concise report on the financial penalties imposed by the Financial Reporting Council (FRC) on Grant Thornton UK LLP and its former partner Philip Westerman for their failings in the statutory audits of Sports Direct International plc. It presents specific details about the issues found during the audits, including failures related to related party transactions, inventory provisions, and website sales revenue. The article also includes a statement from Grant Thornton UK LLP acknowledging the past issues but emphasizing improvements made since then. Overall, it is informative and relevant without any unnecessary noise or filler content.
Financial Relevance: Yes
Financial Markets Impacted: Sports Direct International plc and Grant Thornton UK LLP
Financial Rating Justification: The article discusses a fine imposed on Grant Thornton UK LLP for audit failings related to Sports Direct’s financial years 2016 and 2018, which impacts the financial reporting of the company. This has implications for the financial markets as it affects the credibility of the auditing process and investor confidence in the accuracy of the reported financial information.
Presence Of Extreme Event: No
Nature Of Extreme Event: No
Impact Rating Of The Extreme Event: Minor
Extreme Rating Justification: There is no extreme event mentioned in the text.
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