Ernst & Young Fined Over £1M Re Farepak Audit

Accounting Web reports that the Financial Reporting Council (FRC) has ordered Ernst & Young to pay more than £1M in fines and costs wrt its audit of failed Christmas savings company Farepak.

EY was fined £750,000 and told it had to pay costs of £425,000, while auditor Alan Flitcroft, who worked for EY and was responsible for signing off the audit, was fined £50,000.

Both the firm and Flitcroft were also formally reprimanded by the FRC after admitting their audit of Farepak and parent company European Home Retail (EHR) fell below the expected standard.

The FRC ruled EY and Flitcroft failed to perform adequate procedures to assess all material subsequent events between July 2005 and February 2006.

EY has since said it regrets that aspects of its 2005 audit fell beneath standards, but stressed the regulator did not suggest its conduct triggered Farepak's collapse, or losses to savers.

Farepak collapsed into administration seven years ago, leaving 114,000 people with total losses of £37M.