Accounting watchdog fines Laura Ashley auditor
The auditor of collapsed retailer Laura Ashley Holdings has been sanctioned by the accounting watchdog, it was confirmed on Wednesday.
The Financial Reporting Council has fined UHY Hacker Young £300,000 and audit engagement partner Martin Jones £45,000. Both were also severely reprimanded, and have agreed not to undertake any new audits of public companies until at least May 2024.
Homewares specialist Laura Ashley, which had 155 stores and 2,700 staff, filed for administration in March 2020. Between 2016 and 2019, revenues and profits had both “consistently declined”, the FRC noted, with the loss after tax increasing tenfold in 2019, to £14m from £1.4m a year previously.
Yet the audit reports for 2018 and 2019 were “unmodified, and noted no material uncertainty related to the use of the going concern assumption”, the FRC found.
The regulator acknowledged that Laura Ashley’s administration was not caused by the breaches. But both the 2018 and 2019 audits “failed in the principal objective”, it ruled.
Jamie Symington, deputy executive counsel at the FRC, said: “The breaches in this case where serious, and spanned two audit years affecting multiple areas of the audits, some of which were fundamental to the proper conduct of audit.”
UHY Hacker Young and Jones both admitted serious breaches of relevant requirements, including determination of audit materiality in 2018, going concern assessment and revenue. Their admission and early disposal means that the financial sanctions were reduced to £217,500 and £32,625 respectively.
UHY Hacker Young said: “We recognise that the audits relating to Laura Ashley for the financial years 2018 and 2019 fell below the high standards that we, as a firm, set for ourselves.
“We are confident that the numerous and wide-ranging improvements we have put in place following this review have significantly raised the quality of the audits that we undertake and have addressed the issues identified by the FRC.”