Grant Thornton cleared of misconduct over Globo audit
The Financial Reporting Council (FRC) has concluded its investigation into Grant Thornton UK’s (GTUK) audit of Globo Plc, finding insufficient evidence of misconduct and advising that no further action be taken against the accountancy firm
30 Jul 2018
The enquiry covered calendar years 2013 and 2014 and concerned Grant Thornton’s audit of the mobile technology providers consolidated financial statements for that period.
Grant Thornton was appointed as Globo’s auditor in March 2014, replacing BDO, which had only been in place for a few months.
Globo shares were traded on AIM and most of its business was conducted through subsidiaries based in Greece and Cyprus. Grant Thornton instructed component auditors to deal with the overseas accounts.
In October 2015, Globo chief executive Costis Papadimitrakopoulos, and CFO, Dimitris Gryparis, resigned after notifying the board of ‘falsification of data and the misrepresentation of the company’s financial situation’.
The FRC probe, launched in December 2015, one month after Globo had gone into administration, was conducted under the terms of the Accountancy Scheme.
‘The investigation focused on the matters within the jurisdiction of the Scheme ie, Grant Thornton’s group audit and specifically, its direction, supervision and performance of the group audit engagement. This included Grant Thornton’s evaluation of the sufficiency and appropriateness of the audit evidence obtained by component auditors to express an opinion on the group financial statements,’ said the FRC in a statement.
After the lengthy probe, investigators concluded that there was not enough evidence to prove misconduct.
‘At the conclusion of the investigation, and in accordance with the provisions of the Scheme, the Executive Counsel considered whether there was a realistic prospect that a Tribunal would make a finding of misconduct. Misconduct means an act or omission or series of acts or omissions which falls significantly short of the standards reasonably to be expected of an auditor. The test which would be applied by a Tribunal is whether the conduct is more than negligence and must cross the threshold of real seriousness,’ said the FRC.
‘Following consideration of all the relevant evidence gathered during the investigation, the requirements of ISA 600 (Audits of Group Financial Statements), ISA 220 (Quality control for an Audit of Financial Statements) and ISA 240 (The Auditor’s Responsibilities Relating to Fraud) and the opinion of an independent expert, the Executive Counsel concluded that there was no realistic prospect of a finding of misconduct.’
Report by Rob Munro