UK accounting watchdog fines auditor of collapsed retailer Laura Ashley
Britain’s accounting watchdog has issued a “severe reprimand” to the auditor of Laura Ashley, after it failed to highlight risks over the fashion and homeware chain’s future in two reports before its collapse.
The Financial Reporting Council (FRC) said it had fined UHY Hacker Young £300,000, and imposed other sanctions against the firm, relating to its audits of the retailer, which slid into administration during the pandemic.
An audit engagement partner at the firm, Martin Jones, was also fined £45,000 for the audit breaches and ordered not to sign any statutory audits for public interest entities for two years.
The FRC said its sanctions related to audits of Laura Ashley’s financial statements for the financial years ending on 30 June 2018 and 30 June 2019, which were signed by Jones.
The retailer’s revenue and profits “consistently declined” from mid-2016 until its collapse four years later. Meanwhile its loss after tax increased 10-fold from £1.4m in 2018 to £14m in 2019.
Despite this, the 2018 and 2019 financial year reports were not modified, the FRC said, and the auditors did not note any material uncertainty over whether the retailer would be able to continue operating.
Laura Ashley, which was listed on the London Stock Exchange, had 155 UK stores in 2019 and employed more than 2,700 people. It fell into administration in March 2020, as Covid swept through Britain.
The company had previously been seeking a £15m emergency loan to stave off its collapse, but blamed the pandemic for thwarting rescue talks.
The FRC said the audit breaches by UHY Hacker Young did not cause Laura Ashley’s administration, but the audits “failed in their principle objective” of providing “reasonable assurance about whether the financial
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