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Crowe UK slapped with £144,000 audit fine

May 14, 2024

Crowe UK LLP has received a £144,000 sanction from the accountancy watchdog over its poor-quality audit of the Jersey-based property development company Aseana Properties Limited.

The Financial Reporting Council (FRC) penalised audit firm Crowe UK LLP after finding failures in its audit of London-listed company Aseana Properties Limited for the year ended 31 December 2019. The reviewed audit was said to be “unsatisfactory” and overall of “poor quality”.

The FRC highlighted that Crowe’s most significant audit failing was in respect of carrying value of inventory. Although there were other areas of concern, including the assessment of fraud risk and engagement quality control reviewer oversight.

Regulatory penalty

Concluding that Crowe failed to comply with the regulatory framework for its audit, the FRC enforcement committee imposed a regulatory penalty of £180,000.

The penalty was discounted by 20% to £144,000 after the enforcement committee took into account the audit firm’s cooperation and the steps it has taken to ensure non-repetition.

Crowe has also proposed written undertakings, which have been accepted by the FRC enforcement committee and will be monitored by the FRC’s audit quality review team.

The audit was carried out in the Crown Dependencies Recognised Auditor Sanctions Procedure, which covers Guernsey, Jersey and the Isle of Man.

A spokesperson for Crowe UK told AccountingWEB: “We are pleased the matter has been settled. We have continued to develop our audit methodology and guidance in the four years since the work was carried out and to make significant investment in our audit business. Audit quality and its continuous improvement remain a key priority for the firm.”

The last time Crowe UK found itself on the wrong side of a regulator was on the other side of the Atlantic. Last August, the audit firm ended up having to pay the US Securities and Exchange Commission (SEC) $750,000 after failing to properly audit sham music steamer Akazoo.

Crowe’s botched audit of Akazoo – who had falsified company statements – was criticised by the SEC as contributing to giving the streamer “the air of legitimacy” that led it to becoming a publicly traded company.

Sanctions from the FRC

Crowe is the latest accountancy firm to face a financial sanction from the FRC. Last week, both PwC and EY received £5m fines over the audits of London Capital & Finance (LCF).

Elsewhere, KPMG was hit with a £1.46m fine back in March for the serious failings in its audit of M&C Saatchi. Grant Thornton is the recipient of the smallest fine so far dished out by the FRC this year at £50,000 for its audit of a local authority’s pension fund.

[Accountancy WEB]

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