Watchdog launches new probe into EY over ‘unauthorised’ audit reports

The accountancy watchdog has commenced a new investigation into the Big Four firm EY and two of its members.

In an announcement on Wednesday morning, the Financial Reporting Council (FRC) revealed that it has commenced an investigation into “unauthorised issuance of auditor’s reports to audited entities”.

This comes after the Big Four firm informed the regulator “that it has identified and informed the relevant audited entities, remediated the audit files, and concluded that no adjustments to the related financial statements or audit opinions were required”.

However, in July, the FRC decided to open a probe into the matter, which its executive counsel will conduct. Its decision on this matter will be revealed at a later date, but this announcement does not indicate that the FRC has made, or will make, any findings of misconduct.

The client at the heart of the probe and the two members have also not been named.

A spokesperson for EY said: “We self-reported this matter to the FRC and will continue to fully co-operate with the investigation.”

The Big Four firm was sanctioned £500,000 by the regulator earlier this year over its audit of a Scottish water company.

The firm received this fine for the water company audit less than a week after it was slapped with a £6.5m fine for its audit of the collapsed airline Thomas Cook.

Figures seen by City AM in April show that the FRC has fined the Big Four giants over £154m pre-discount in the last five years. At the time, by total financial amount, EY had faced the lowest fines, totalling over £18m (discounted to £12.3m) over those years counted.