FRC: Sanctions against MSR Partners LLP and Stephen Corrall

10 May 2019 01:38 PM

The Financial Reporting Council (FRC) has issued a Final Decision Notice under the Audit Enforcement Procedure and imposed sanctions against MSR Partners LLP (formerly Moore Stephens LLP) and Stephen Corrall, Audit Engagement Partner, in relation to the statutory audit of the financial statements of Laura Ashley plc for the financial year ended 30 June 2016.

The sanctions are:

MSR Partners LLP:

Mr Corrall:

MSR Partners LLP and Mr Corrall have admitted 11 breaches of Relevant Requirements in relation to the audit of materiality, revenue and going concern. The breaches were serious and pervasive throughout the audit and included: setting materiality at three times the appropriate level; failing to gather sufficient appropriate audit evidence when assessing the use of the going concern assumption; and failure to obtain sufficient appropriate audit evidence in relation to their work on revenue.

In response to the identified failings in the 2016 audit, Moore Stephens LLP took wide-ranging remedial steps to improve their audit practice. In addition, Moore Stephens LLP and Mr Corrall provided an exceptional level of co-operation during the investigation, undertaking their own investigation into their failures, sharing the results with those conducting the investigation and making comprehensive early admissions.

Claudia Mortimore, Deputy Executive Counsel of the FRC, yesterday said,

“Whilst the financial statements in question are not alleged to have been materially misstated, the audit work in this case was deficient in numerous respects. It is right therefore that enforcement action has been taken and sanctions imposed. The Respondents’ high level of co-operation with the investigation has been reflected in the discount applied to the fines.”

The FRC’s Decision Notice was issued within 14 months of the investigation being opened.

A link to a decision notice can be found here (pdf).