Fashion retailer Laura Ashley fell into administration during the pandemic © Charlie Bibby/Financial Times
The accounting watchdog has “severely reprimanded” the auditor of fashion retailer Laura Ashley, which fell into administration during the pandemic.
The Financial Reporting Council said on Wednesday it had fined UHY Hacker Young £300,000 as a result of failings in relation to its audit of the retailer.
Martin Jones, an audit partner at the firm, has also been fined £45,000 and given a severe reprimand.
The FRC said the penalties relate to Laura Ashley’s audits for the financial years ending June 2018 and 2019.
The retailer’s revenue and profits “declined steadily” in the four years from 2016. Its losses increased 10-fold, from £1.4m in 2018 to £14m in 2019.
However, the 2018 and 2019 audit reports “did not observe any material uncertainty related to the use of the going concern assumption”, the FRC said.
Laura Ashley collapsed into administration in March 2020 as a result of the impact of Covid-19 on its business. The retailer had 155 stores and 2,700 employees.
UHY Hacker Young and Jones admitted “serious breaches” of their role requirements, meaning the audits failed to “obtain reasonable assurance about whether the financial statements as a whole were free from material misstatement”, the FRC said.
The audit firm and Jones have volunteered to temporarily withdraw from conducting new audits of public companies for at least two years.
Jamie Symington, deputy chief executive of the FRC, said: “The breaches in this case were serious and spanned two audit years affecting a number of areas of the audits, some of which were critical to the successful conduct of the audit”.
UHY Hacker Young said: “We recognize that the audits relating to Laura Ashley Holdings for the 2018 and 2019 financial years fell below the high standards that we, as a company, have set ourselves.”