Grant Thornton fined £2.3m over Patisserie Valerie audit
Accountancy firm Grant Thornton has been fined for its audit of Patisserie Valerie, the British cafe chain that collapsed in 2018, resulting in the loss of 70 stores and more than 900 jobs.
The Financial Reporting Council (FRC) said it was fining Grant Thornton £4 million (€4.68 million) but would cut it to £2.34 million due to mitigating factors, as well as imposing non-financial measures to improve its procedures.
The FRC said Grant Thornton’s audits during 2015, 2016 and 2017 missed “red flags” and failed to stand back and challenge the management of the cafe chain, whose collapse FRC said led to the closure of 70 stores and more than 900 job losses.
David Newstead, Grant Thornton’s audit partner for Patisserie Valerie, was to be fined £150,000, falling to £87,750, due to mitigating factors. The FRC said it took Grant Thornton’s “size, financial resources and financial strength” into account in determining the level of sanctions.
Grant Thornton had a net income of £471 million in 2020, with an underlying trading profit of £72 million, up 14 per cent on the prior year.
“We regret the quality of our work fell short of what was expected of us in this instance,” Grant Thornton said. “Since the period in question, we have invested significantly in our audit practice to better ensure consistent quality and have started to see the material outcome of this investment,” it said in a statement.
Grant Thornton said it would continue to rigorously defend the civil claim brought by Patisserie Valerie’s liquidators, which “ignores the board’s and management’s own failings in detecting the sustained and collusive fraud which took place”.
“We recognise that there were shortcomings in our audit work; however, our work did not cause the failure of the business,” Grant Thornton said.
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