The Financial Reporting Council, the United Kingdom’s standard-setter for accounting, auditing and actuarial work, announced two separate investigations this week into Grant Thornton UK’s work with two audit clients, beverage maker Nichols plc and the Manchester Building Society, a
mortgage lender.
The FRC and Grant Thornton released few details of either probe, however. On Tuesday, it said it had launched an investigation into whether the firm was independent when it conducted the audits of Nichols plc’s financial statements for the years ended Dec. 31, 2011 and 2012.
On Wednesday, it said it had launched an investigation into the accounting and auditing of interest rate swap arrangements that gave rise to a prior-period adjustment in the Manchester Building Society’s financial statements for the year ended Dec. 31, 2012. “The decision to investigate follows information received from the Prudential Regulation Authority in relation to the conduct of the auditors at the time, Grant Thornton UK LLP,” it added. The FRC noted that its decision to initiate an investigation of the Manchester Building Society was taken following consultation with the Institute for Chartered Accountants in England and Wales.
Grant Thornton UK issued two statements in response to the FRC announcements. In regard to Nichols plc, the firm said, “We acknowledge the Financial Reporting Council's (FRC) statement of Tuesday 6 August 2013 regarding their investigation. The FRC and Grant Thornton have a common interest in promoting good corporate governance and reporting standards. We shall, of course, fully cooperate with any investigation. As a firm, we continue to strive to deliver quality work for our clients and other stakeholders and go to great lengths to maintain our independence.”
In regard to the Manchester Building Society, the firm commented, “We acknowledge the Financial Reporting Council's (FRC) statement of Wednesday 7 August 2013 regarding their investigation. The FRC and Grant Thornton have a common interest in promoting good corporate governance and reporting standards and as such we alerted the regulator as soon as we became aware of a potential issue. We shall, of course, fully cooperate with any investigation. As a firm, we continue to strive to deliver quality work for our clients.”
A Grant Thornton UK spokesperson said they had no further details on the investigations.
