Deloitte fined £900,000 by watchdog over SIG audit failures | Deloitte

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Deloitte has been fined more than £900,000 by the accounting watchdog after failing its audit of building materials company SIG.

The Financial Reporting Council (FRC) also paid a £36,250 fine to Simon Manning, who was an audit partner working on the account.

Deloitte’s initial fine was £1.25m, but the amount was deducted after the “Big Four” accounting firm admitted the breaches. Manning’s fine was also reduced from £50,000 to £36,250.

Deloitte and Manning admitted two breaches related to a review of supplier rebates — financial incentives paid by SIG to its suppliers — and cash.

The Fed said Deloitte failed to obtain sufficient audit evidence to test discount terms and debit balances. He also failed to “exercise sufficient professional scepticism” by not investigating indications that discounting of receivable balances may have been excessive.

Jamie Symington, Deputy Executive Counsel, said: “These breaches relate to two separate areas of audit of a particular subsidiary of SIG plc. It involved breaches of requirements that are central to the role of the independent auditor, and was related to material misstatements in SIG plc’s accounts that had to be corrected.

“Violations with respect to supplier rebates are made more serious by the fact that the FRC has highlighted these complex supplier arrangements as requiring special attention from auditors.”

The financial penalties were in connection with the audit of SIG’s financial statements for the fiscal years ending December 31, 2015 and December 31, 2016.

A Deloitte spokesperson said: “We are disappointed that our work on SIG plc’s 15 and 16 full year audits – related to auditing supplier rebates and cash – fell short of the high standards expected of us.

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“We have learned from the matters identified by the Financial Audit Committee and remain committed to audit quality and continuous improvement.”

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