Deloitte audit of affected fashion retailer Joules is under investigation by the Financial Reporting Council
- FRC said the decision to proceed with the probe was made in March
- Deloitte’s audit of Joules for the year ended May 30, 2021 in the spotlight
An investigation has been launched into Deloitte’s audit of retailer Joules for the year ended May 30, 2021.
The accounting giant signed the accounts of the embattled retailer before it went bankrupt last year.
The Financial Reporting Council said on Tuesday that the investigation will be conducted by its Department of Enforcement under its audit enforcement procedure, following a decision by its conduct committee on March 20, 2023.
Probe: The FRC has launched an investigation into a Deloitte audit of Joules
A Deloitte spokesperson said the group would “fully cooperate with the Financial Reporting Council’s investigation” and “remain committed to the highest standards of audit quality.”
Joules was saved from bankruptcy by street stalwart Next in a £41m action that saved around 1,450 jobs.
But while Next is looking to relaunch the brand via its Total platform later this year, it announced last month that it had launched a new consultation on job cuts.
As part of the deal to bail out the retailer in December, founder Tom Joule, who founded the group in 1989, took a 26 percent stake in the company.
Leicestershire-based Joules struggled to survive as the pandemic hit retail hard, causing a major drop in attendance.
Stricken: Joules struggled to keep his finances and attendance numbers afloat
In December, Deloitte was fined more than £900,000 by the accounting watchdog after failures in the audit of building materials group SIG.
The FRC also handed a £36,250 fine to Simon Manning, who was the audit engagement partner working on the bill.
Deloitte’s initial fine was £1.25 million, but the amount was reduced after the company admitted the breaches. Manning’s fine was reduced from £50,000 to £36,250.
Jamie Symington, Deputy Executive Adviser to the FRC, said: ‘These breaches concerned two separate areas of the audit of a particular subsidiary of SIG plc.
“These were breaches of requirements fundamental to the role of the independent auditor and related to material misstatements in SIG plc’s accounts that required correction.
“The supplier rebate violations were made all the more serious by the fact that the FRC had flagged these complex supplier arrangements as requiring particular attention from auditors.”
In September 2020, Deloitte was fined £15 million and heavily reprimanded for deficiencies in the audits of the software company Automated between January 2009 and June 2011.