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The U.K. accounting regulator closed a two-year probe into Grant Thornton U.K. LLP’s audit of a collapsed technology company, saying not enough evidence emerged to bring misconduct proceedings.
The Financial Reporting Council (FRC) announced in 2015 that it was investigating Grant Thornton’s audit of Tonbridge, U.K.,-based Globo Plc, a mobile technology developer that entered bankruptcy a month before the inquiry was launched.
“We investigated GT’s group audit and work to check the component audits in Greece and Cyprus,” an FRC spokesman told Bloomberg Tax by email. “The evidence did not meet the test for Misconduct under the Accountancy Scheme. We therefore have to close the investigation and that’s the end of the matter.”
Globo did most of its business through overseas subsidiaries in Greece and Cyprus. The investigation covered Grant Thornton’s audits of Globo’s 2013 and 2014 financial statements, when it audited the group’s statements and instructed component auditors in Greece and Cyprus.
Globo’s CEO and CFO resigned in November 2015 after it was revealed that the company’s financial situation had been misrepresented and data falsified. Globo collapsed soon afterwards. Grant Thornton had replaced BDO U.K. LLP as the company’s auditors at the start of the previous year.
“We co-operated fully with the FRC throughout its investigation and are pleased that the FRC, with the assistance of an independent expert, have concluded that the investigation should be closed without further action,” a Grant Thornton spokesman said in an emailed statement.
There have been a number of recent scandals in the U.K. when companies collapsed without warning from their auditors they were in trouble. A Parliamentary study was harshly critical of KPMG LLP’s audit of Carillion Plc, a construction and outsourcing company that collapsed in January.
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