The Financial Reporting Council (FRC) said on Wednesday it fined Grant Thornton UK £3 million for “firm-wide failures” to ensure compliance with ethical standards between 2014 and 2017 and also “the loss of independence” in its audit of Conviviality Retail Plc for the year ending April 30, 2014.

“The firm failed to take responsibility for ensuring an appropriate control environment that placed adherence to ethical principles and compliance with ethical standards and requirements above commercial considerations,” said the FRC.

“In particular, its policies and procedures designed to ensure compliance were defective, as well as being inadequately implemented and monitored; it failed adequately to resource its ethics team; and it did not have an appropriate enforcement regime whereby individual breaches of ethical standards were identified.

“The failures were repeated and prolonged (over a course of three years) and resulted in numerous breaches of ethical standards and requirements by the firm’s partners and staff.”

On the audit of Conviviality Retail, the FRC said: “Grant Thornton seconded a senior manager who had performed limited work on the audit to assist in the preparation of the company’s accounts, in breach of relevant ethical standards. 

“Grant Thornton completed the audit and provided an unqualified audit opinion to the company in circumstances where the threats to independence raised by the secondment were such that the firm should not have provided an audit opinion but rather should have resigned from the engagement …”

FRC Deputy Executive Counsel Claudia Mortimore said: “It is vital that audit firms comply with ethical standards and requirements and create the necessary culture and control environment so that their people really understand their importance. 

“In this case, there were firm-wide failures over a number of years which not only led to numerous breaches of such requirements on individual audits but also the real risk of more such breaches which have not been, and will never be, reported or identified. 

“The sanctions in this matter not only send a clear message as to how seriously the FRC views such failures but are also focused on ensuring that there is no repetition and the causes of the failures are effectively addressed at their roots.”