News
Danny McCance 15 Apr 2019 10:13am

FRC fines Baker Tilly £750,000

The Financial Reporting Council (FRC) has fined Baker Tilly UK Audit – now part of RSM UK – £750,000 for misconduct during its audit of Tanfield Group and two of its subsidiaries

The sanctions also include fines for engagements partners Richard King and Steven Railton, of £30,000 and £35,000 respectively, while Baker Tilly, King and Railton also all received reprimands.

An independent tribunal made findings of misconduct after hearings in 2017 and 2018.

The misconduct and sanctions relate to the audit of Tanfield’s inventories and trade receivables, in which an independent tribunal found errors and discrepancies that had not been identified by King and Railton.

The tribunal also decided that a response by Railton to a profit warning in Tanfield’s 2008 trading statement was inadequate.

The authority began looking into the 2007 and 2008 audits of Tanfield Group, an electric car manufacturer, and two of its subsidiaries in 2009. In 2014 it launched a formal complaint against the firm in regards to the 2007 audits.

In 2017, a tribunal found Baker Tilly’s misconduct in regards to its competency to be a “non-trivial failure”. The firm launched an appeal against this stating that the categorisation did not match the authority’s own definition of misconduct.

The appeal was ultimately dismissed by the Court of Appeals.

A spokesperson for RSM said the firm was “pleased that more than a decade after the audit engagements were performed by Baker Tilly, this matter has reached a conclusion with only limited aspects of the FRC complaints being upheld by a tribunal”.

They added that the firm, much like many other large firms, has changed its audit processes since 2007 and that likewise financial reporting standards themselves have changed.

“Nevertheless, RSM will take account of the findings of the tribunal in our continuous review of our practices, procedures and training,” the spokesperson said.

Baker Tilly UK, previously an RSM member firm, became RSM UK following a rebranding in 2015.

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