UK regulator penalizes auditor and partner for breaches in 2021 SRG audit, linked to retailer’s later administration.
The UK Financial Reporting Council imposed a £577,125 fine on Forvis Mazars and a £33,412 penalty on audit partner David Allen for serious audit failings related to Studio Retail Group’s 2021 financial statements. The regulator cited breaches in expected credit losses, going concern assessments, and financial services income audits.
SRG, a former London-listed digital retailer, entered administration in February 2022, eight months after Forvis Mazars signed off on its audit. The FRC noted that creditors and shareholders suffered substantial losses, with shareholders losing their entire investment. The audit failings involved key areas identified as significant risks.
Forvis Mazars and Allen received a severe reprimand alongside the financial penalties. The FRC highlighted failures in evaluating SRG’s expected credit loss provisions, a complex accounting estimate requiring critical judgment.