backOn July 8, 2024, the Financial Reporting Council (“FRC”) announced that it has imposed sanctions against MacIntyre Hudson LLP (“MHA” or the “Firm”), a former MHA partner, and a former MHA director following the FRC’s investigation into the Firm’s audits of MRG Finance UK PLC (the “Company”) for fiscal years 2018 and 2019. The former MHA partner served as the engagement partner for the 2018 audit, and the former MHA director, although not a partner, served as the engagement partner for the 2019 audit.
The FRC found multiple audit failings, most significant of which was the engagement teams’ failures during the client acceptance and continuance process in each audit year to identify, based on bonds listed on London Stock Exchange debt market, that the Company was a Public Interest Entity even though it did not list any publicly traded shares. The FRC found that the Firm’s and the engagement partners’ failures to adequately gain an understanding of the Company and the regulatory framework applicable to it resulted in breaches of the accounting standards and documentation requirements related to the confirmation of bank balances, a loan to a parent company, and a going concern assumption.
The FRC sanctioned MHA in the amount of £200,000 (reduced by 7.5% for mitigating factors, and an additional 35% to £120,250 to reflect admissions and early resolution), sanctioned the former partner in the amount of £30,000 (reduced by 35% to £19,500 to reflect admissions and early resolution), and sanctioned the former director in the amount of £25,000 (reduced by 25% to £18,750 to reflect admissions and early resolution). The FRC also published a statement of Severe Reprimand as to the firm and both individuals.
A copy of the FRC’s Final Settlement Decision Notice can be found here. A copy of the FRC’s announcement of the sanctions can be found here.