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EY has been hit with a new probe by the UK accounting watchdog, piling further pressure on the Big Four firm already dealing with four investigations and £5mn in fines this year.
The Financial Reporting Council said on Wednesday that it had launched an investigation of two individual EY auditors, as well as the firm itself, for issuing “unauthorised” auditors’ reports to unnamed companies. EY said it had “self-reported” the issues to the regulator.
The new investigation will add to four probes already under way into EY. They include one into the Big Four firm’s work on checking the books for the scandal-hit Post Office and another into two unnamed companies earlier this year.
The FRC is still examining EY’s audits of collapsed furniture retailer Made.com and FTSE 100 hospital operator NMC Health, from 2023 and 2020, respectively.
The NMC Health audit is also being scrutinised in London’s High Court after its administrators accused EY of negligence. They are seeking damages of about £2bn on behalf of NMC creditors who lost money when the hospital operator collapsed.
The litany of probes means EY could face millions of pounds in financial penalties if it is found to have breached audit requirements.
The firm has already paid more than £5mn in fines this year after “serious breaches” of audit standards in its work on failed travel group Thomas Cook’s accounts, and for auditing listed company Stirling Water Seafield Finance for more than 10 years without publicly retendering for the contract.
EY said it would “continue to fully co-operate” with the FRC’s investigation.
The FRC said the firm had informed the regulator that it had “identified and informed the relevant audited entities, remediated the audit files and concluded that no adjustments to the related financial statements or audit opinions were required”.
The new investigation was opened under rules that govern the professional behaviour of accountants in cases of misconduct or in public interest cases, such as where a significant number of people are affected or a large sum of money has been lost.