Interserve plc went into a pre-pack administration in March 2019 and was rebranded as Interserve Group.
The Adverse Findings against Grant Thornton and its partner Simon Lowe concerned audit work performed on:
- a substantial loss provision in the financial statements for FY 2015 and FY 2016 against an ‘Energy from Waste’ contract for the construction of a waste treatment facility. There were serious evidence and scepticism failings by the auditors in respect of key judgements and accounting estimates relevant to the loss provision, an area identified as a significant risk in the audit; and
- aspects of the auditors’ assessments of going concern and goodwill impairment in the financial statements for FY 2017 (both having been identified, at planning stage, as areas of significant risk for the audit), where work on elements of the analysis of management’s modelling of the financial data was inadequately performed or, in some respects, inadequately documented.
Claudia Mortimore, Deputy Executive Counsel to the FRC, said: “This is a proportionate package of sanctions in respect of failings over three consecutive audit years. It reflects on one hand the seriousness of certain evidence and scepticism failures in FY 2015 and FY 2016, while recognizing that the Adverse Findings were limited to discrete areas of large audits.
“We note the exceptional cooperation provided by the Respondents throughout the investigation and this has been reflected in the discount to the financial sanctions.
“Some of the evidence relevant to this decision is legally privileged and we acknowledge the assistance provided by the administrators of the Company and Interserve Group Limited in agreeing that the material could be used in confidence for the limited purposes of our investigation and any subsequent enforcement proceedings.”