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The accounting watchdog has “severely reprimanded” fashion retailer Laura Ashley’s auditor, who fell into administration during the pandemic.
The Financial Reporting Council said on Wednesday it had fined UHY Hacker Young £300,000 over failings in its audit of the retailer.
Martin Jones, the firm’s audit engagement partner, was also hit with a £45,000 financial penalty and a severe reprimand.
The FRC said the sanctions relate to Laura Ashley’s audits for fiscal years ending in June 2018 and 2019.
The retailer’s revenue and profits have “constantly declined” in the four years from 2016. Its losses have increased tenfold from £1.4million in 2018 to £14million in 2019.
However, the audit reports for 2018 and 2019 “did not note any material uncertainty related to the use of the going concern assumption,” the FRC said.
Laura Ashley collapsed into administration in March 2020 following the impact of Covid-19 on her business. The retailer had 155 stores and 2,700 employees.
UHY Hacker Young and Jones admitted “serious breaches” of the requirements of their role, meaning the audits did not “obtain reasonable assurance that the financial statements as a whole were free from material misstatement”, said said the FRC.
The auditing firm and Jones have volunteered to temporarily withdraw from conducting new audits of public companies for at least two years.
FRC Deputy Executive Counsel Jamie Symington said: “The breaches in this case were serious and spanned two years of the audit, affecting several areas of the audits, some of which were fundamental to the proper conduct of the audit. “
UHY Hacker Young said: “We recognize that the audits relating to Laura Ashley Holdings for fiscal years 2018 and 2019 fell below the high standards that we as a firm have set ourselves.”