Big Four firm EY and its London office managing partner, Julie Carlyle, have been issued fines totalling nearly £1.3m by the Financial Reporting Council (FRC). The sanctions relate to audit failings concerning the retailer Made.com in 2021.
The FRC imposed a fine of £1.1m against EY and £49,000 against Ms Carlyle. These amounts were discounted due to EY and Ms Carlyle admitting the failings and cooperating with the investigation.
The audit deficiencies included not adequately performing procedures to assess the accuracy of Made.com's financial forecasting models. Auditors also failed to gather sufficient evidence regarding the company’s deferred tax assets and did not consider new evidence that became available between the audit creation and the signing of the final report.
Penrose Foss, executive counsel at the FRC, stated that auditors relied on management's forecasts without sufficient challenge or testing, increasing the risk of inaccurate financial statements. Made.com, a furniture retailer, entered administration in 2022 and its intellectual property was later purchased by Next.