An audit registered firm was severely reprimanded, fined £24,500 and required to pay costs following a finding that they:
1. Accepted appointments as the auditor and signed unqualified audit reports on the financial statements of three clients, when the former audit engagement partner had joined the audited entity within two years of ceasing to be the audit engagement partner. This was in breach of paragraph 49 of APB Ethical Standard 2. The audit reports were signed on 9 September 2013 on financial statements year ended 31 March 2013.
2. Signed unqualified audit reports when a former partner had joined the audited entity and the firm did not take action to ensure that no significant connection remained between the firm and the individual in breach of paragraphs 43 and/or 44 of APB Ethical Standard 2.
The audit reports were signed:
- in December 2014 on the financial statements of three clients, year ended 31 March 2014;
- in December 2015 on the same three clients, year ended 31 March 2015; and
- in March 2016, signed unqualified audit reports on a further two clients financial statements’ year ended 31 July 2015.
3. Signed unqualified audit opinions when a former partner had joined the audited entity and the firm did not take action to ensure that no significant connection remained between the firm and the individual in breach of paragraphs 2.45 and/or 2.46 of the FRC Revised Ethical Standard. The audit opinions were signed:
- in December 2016 on the financial statements of three clients, year ended 31 March 2016;
- on the same three clients’ financial statements (year ended 31 March 2017) in December 2017; and
- in March 2017 on two further clients’ financial statements, year ended 31 July 2016.
A member was severely reprimanded, fined £7,000 and required to pay costs as he issued, on behalf of his firm, an unqualified audit opinion on the financial statements of a client.
The audit opinion stated that the audit had been conducted in accordance with International Standards on Auditing (UK). The audit had not been conducted in accordance with International Standard on Auditing (UK) 500 ‘Audit Evidence’ as he failed to obtain sufficient appropriate audit evidence to be able to draw reasonable conclusions on which to base the auditor’s opinion in relation to stock.
A member was reprimanded, fined £1,400 and required to pay costs as he failed to comply with an undertaking he gave to the Audit Registration Committee. The undertaking was to obtain an external hot file review and to submit the results of that review to ICAEW within one month of its completion. This was in respect of the audit of “Y” Ltd for the year ended 31 December 2017, signed on 26 September 2018.
A member was severely reprimanded, fined £14,000 and required to pay costs for failing to ensure that his firm had complied with The Money Laundering Regulations 2007 as follows:
- paragraph 20(1)(a) & (e) in that he did not establish and maintain appropriate and risk-sensitive policies and procedures relating to customer due diligence measures and ongoing monitoring and risk assessment and management. AND/OR
- paragraph 20(1)(f) in that he did not monitor and manage their compliance with The Money Laundering Regulations 2007. AND/OR
- paragraph 7 in that he did not ensure that appropriate and complete customer due diligence measures were applied to all of their clients.
A member received a reprimand, a fine of £1,750 and was required to pay costs as a result of comments he made in emails he sent to HMRC which were contrary to ICAEW’s Code of Ethics section 150 (Professional Behaviour).