REG - Financial RepCouncil - Sanctions against Deloitte LLP and Simon Manning

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22/12/2022 08:16

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RNS Number : 5960K  Financial Reporting Council  22 December 2022

 

Sanctions against Deloitte LLP and Simon
Manning

22 December 2022

The Executive Counsel of the Financial Reporting Council (FRC) has issued a
Final Settlement Decision Notice under the Audit Enforcement Procedure and
imposed sanctions against Deloitte LLP and Simon Manning, Audit Engagement
Partner, in relation to the statutory audit of the financial statements of SIG
plc for the financial years ended 31 December 2015 and 31 December 2016.

The sanctions are:

Against Deloitte,

·    A financial sanction of £1,250,000 (discounted for admissions and
early disposal to £906,250);

·    A published statement in the form of a Severe Reprimand;

·    A declaration that the 2015 and 2016 audit reports signed on behalf
of the firm did not satisfy the Relevant Requirements; and

·    An order requiring the firm to take specified action to mitigate the
effect or prevent the occurrence of the contravention.

Against Mr Manning,

·    A financial sanction of £50,000 (discounted for admissions and early
disposal to £36,250); and

·    A published statement in the form of a Severe Reprimand.

Deloitte and Mr Manning admitted two breaches of Relevant Requirements in
relation to the audit of supplier rebates and cash.

In respect of supplier rebates (financial incentives paid to SIG by its
suppliers, to encourage the company to purchase the suppliers' goods),
Deloitte and Mr Manning failed to obtain and document sufficient appropriate
audit evidence in respect of the testing of rebate terms as set out in SIG
plc's rebate workbooks, and the testing of rebate debtor balances. They also
failed to exercise sufficient professional scepticism by failing to
investigate indications that rebate debtor balances may have been overstated.

In respect of cash, Deloitte and Mr Manning failed to obtain sufficient
appropriate audit evidence in respect of cheque payments made around the
year-end, and failed to exercise sufficient professional scepticism by failing
to investigate indications that cheque payments claimed to have been made
post-year-end should properly have been regarded as pre-year-end payments.

Deloitte and Mr Manning co-operated with the FRC's investigation and admitted
the breaches. The extent and timing of their admissions is reflected in the
27.5% discount which has been applied to the financial penalties.

Jamie Symington, Deputy Executive Counsel, said:

"These breaches concerned two discrete areas of the audit of a particular
subsidiary of SIG plc. They involved contraventions of requirements which are
fundamental to the role of the independent auditor, and were associated with
material misstatements in SIG plc's accounts which had to be corrected. The
breaches in respect of supplier rebates were made all the more serious by the
fact that the FRC had highlighted these complex supplier arrangements as
requiring particular attention from auditors."

A copy of the Final Settlement Decision Notice can be found here.
(https://www.frc.org.uk/getattachment/06d1b6cb-ce5b-4ec2-b230-03856494ab31/Final-Settlement-Decision-Notice_Delotte.pdf)

 

 

 

 

 

 

Notes to editors:

 

The FRC's purpose is to serve the public interest by setting high standards of
corporate governance, reporting and audit and by holding to account those
responsible for delivering them. The FRC sets the UK Corporate Governance and
Stewardship Codes and UK standards for accounting and actuarial work; monitors
and takes action to promote the quality of corporate reporting; and operates
independent enforcement arrangements for accountants and actuaries. As the
competent authority for audit in the UK the FRC sets auditing and ethical
standards and monitors and enforces audit quality.

 

All media enquiries should be directed to the FRC communications team:

·      Adam Mohamed, Senior Communications Manager, on telephone: 020
7492 2395 or email: a.mohamed@frc.org.uk (mailto:a.mohamed@frc.org.uk) .

·  Robert Williams, Communications Manager, on telephone: 020 3145 9396 or
email: r.williams@frc.org.uk (mailto:r.williams@frc.org.uk) .

If you no longer wish to receive press releases from the FRC please email
unsubscribe@frc.org.uk (mailto:unsubscribe@frc.org.uk) .

 

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