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24 April 2019
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AUDIT WATCHDOG OPENS AN INVESTIGATION INTO INTERSERVE ACCOUNTS

12 April 2019 | Herpreet Kaur Grewal 


The Financial Reporting Council (FRC) has begun an investigation into the audit by Grant Thornton UK LLP of the financial statements of Interserve plc for the years ended 31 December 2015, 2016 and 2017. 


The scrutiny will be conducted under the audit enforcement procedure. In brief, the stages of the this procedure are: 

 

• Initial case examination and decision to investigate

• Investigation;

• Decision by executive counsel as to whether to issue a Decision Notice (a notice with the findings and recommended sanction);

• Referral to enforcement committee and decision by the enforcement committee whether to issue a decision notice; and

• Referral to a tribunal


In order for a matter to be referred for investigation by the FRC’s executive counsel under the Audit Enforcement Procedure, the FRC’s conduct committee must decide whether there is good reason to investigate an allegation in relation to a statutory auditor and/or a statutory audit firm.

 

Investigations are usually conducted by executive counsel and the enforcement division. The FRC’s conduct committee may direct that the investigation is delegated to a recognised supervisory body (RSB), which will provide an investigation report to the executive counsel so that he or she may decide whether to issue a decision notice.


Last month, Interserve’s board voted against its deleveraging plan and the company went into administration shortly before being bought out by its lenders.