London - Britain's accounting watchdog has fined audit and advisory firm Mazars 2 million pounds (R35 million) for failing in 2007 to meet regulatory standards while advising a pension fund.
It is the latest example of how the Financial Reporting Council (FPC) is using its enhanced armoury of sanctions in a bid to raise standards in a sector criticised for its performance in the run up to the global financial crisis.
The FRC said on Tuesday that Mazars and one of its partners, Richard Karmel, had admitted their conduct fell significantly short of the standards that could be reasonably expected.
Mazars said in a statement it regretted its conduct fell below its usual high standards.
“We are pleased that the FRC accepted that the misconduct was neither dishonest nor deliberate, that we took appropriate remedial steps relating to quality assurance, and that it did not cause any actual loss to the beneficiaries of the pension fund,” Mazars said.
The FRC brought a disciplinary case regarding the advice Mazars gave to the trustee of the First Quench Pension Fund, which was 28 million pounds in the red, on a proposal to transfer the sponsoring employer from First Quench Retailing to another entity.
First Quench Retail Limited was a wholly-owned subsidiary of UK wine shop chain Threshers, and went bust in 2009.
Mazars was accused of revealing confidential client information to the other and opposing party in the transaction, and of failing to consider the different and fundamentally opposing commercial interests of the two companies involved in the transaction, the FRC said in documents published on Tuesday.
“Accountants must not allow undue influence of others to override their professional judgements and they must have a clear understanding of who their client actually is,” FRC executive director of Conduct, Paul George, said in a statement.
Mazars was fined 750,000 pounds and received a severe reprimand.
It will also pay 1.12 million pounds to cover the FRC's costs.
Karmel, who still works at Mazars, was fined 50,000 pounds, the FRC's second largest penalty against an individual, and also received a severe reprimand. He will pay 80,000 pounds towards the FRC's costs. - Reuters