Watchdog gives UHY Hacker Young a slap on the wrist for shoddy audit
The Financial Reporting Council (FRC) has given what it described as a “severe reprimand” to UHY Hacker Young for its audit of a Malaysia-based rubber manufacturer.
The FRC declared UHY Hacker Young’s 2016 audit of Inch Kenneth Kajang Rubber (IKKR) was unsatisfactory, and as a result told the accountancy firm to give staff involved in the audit more training.
The audit failures included a general failure to prepare sufficient audit documentation, a failure to obtain sufficient appropriate audit evidence and a lack of professional scepticism, the FRC said.
The FRC also personally reprimanded Julie Zhuge Wilson, who was the audit engagement partner on the project.
The watchdog stopped short of fining UHY or Wilson, though both will have to pay for the cost of the investigation, totalling £146,752 and £62,894 retrospectively.
Wilson has also been banned from acting as a statuary auditor of any listed company for two years.
UHY has already undertaken “significant remedial action” following the regulator’s audit quality review of the group, the FRC added.
FRC deputy executive counsel Claudia Mortimore said: “The relevant requirements breached in this case related to numerous fundamental areas of the audit and were designed to ensure the quality and effectiveness of the audit.
“The proportionate sanctions are geared towards preventing recurrence of the breaches and improving audit quality.”
A UHY spokesperson said: “As a firm we are absolutely committed to delivering robust and thorough audits. We are obviously disappointed that this audit did not meet those standards.
“Since the issue with this audit was identified we have performed an in-depth review of our audit technical materials, training processes and quality control assessments to help ensure that this kind of issue does not occur again.
“Our systems and controls have been enhanced so that any potential problems over the resourcing of audits is identified and rectified at an early stage. We have also brought in much closer oversight, by our most senior audit and compliance team, of the Public Interest Entity audits that we undertake.
“The partner responsible for this audit has subsequently left the firm.”