Grant Thornton fined £40,000 for failings at council pension fund

Grant Thornton has been fined £40,000 over failures of its audit of a council’s pension fund.

The Financial Reporting Council (FRC) found the UK’s sixth largest accounting firm made “material errors” during a major local authority audit for the year ending March 2021.

The accounting watchdog’s enforcement committee said these failures represented a “significant departure” from the standards expected of a registered auditor and had the potential to affect the public, employees, pensioners or creditors.

These included “two uncorrected material errors” in the pension fund’s audited financial statements that were included in the local authority’s annual report, which did not feature in the pension fund’s own financial statements.

They also found that Grant Thornton failed to obtain sufficient evidence that the value of the pension fund’s investments was “materially accurate”.

The FRC said that a sanction was necessary to ensure Grant Thornton’s local audit functions are undertaken, supervised and managed effectively.

The regulator initially proposed a £50,000 sanction against the firm, but discounted the penalty by 20pc to £40,000 to reflect the company’s cooperation and other mitigating factors.

The FRC said: “The committee acknowledges that Grant Thornton UK LLP provided cooperation, including at an early stage, took appropriate remedial steps promptly once the failing was identified and demonstrated contrition.

“There was also no evidence to support financial gain or benefit from the failure.”

Grant Thornton has accepted the sanction and has issued written undertakings in response to the penalty.

The FRC’s sanctions over local audits principally refer to local authorities and health bodies other than NHS Foundation Trusts, which are separately handled by NHS England.

Major local audits include those where council pension schemes have at least 20,000 members or manage more than £1bn in assets, according to accounting rules.

A Grant Thornton spokesman said: “We note the findings of the regulator’s investigation, with which we have cooperated throughout, and regret the errors identified.

“As a leading provider of audit and related assurance services to the public sector, we remain committed to high-quality work and have taken steps to further improve this.”