By Tom Wilson
LONDON (Reuters) -Britain's accounting watchdog said on Thursday it had fined Deloitte LLP more than 900,000 pounds ($1.09 million) over its audits of building materials supplier SIG plc for the 2015 and 2016 financial years.
The Financial Reporting Council (FRC) said it had imposed a penalty of 1.25 million pounds on Deloitte LLP, reduced to 906,250 pounds after it admitted breaches over its work on SIG's financial statements.
The FRC reprimanded Deloitte, ordering it to take action prevent the breaches from happening again. It also fined Deloitte audit engagement partner Simon Manning 50,000 pounds, reduced to 36,250 pounds, after he also admitted the breaches.
Deloitte and Manning admitted two breaches in relation to the audit of supplier rebates - incentives paid to SIG by its suppliers - and cash, the FRC said.
They failed to obtain and document audit evidence over the testing of rebate terms and the testing of rebate debtor balances, it said. They also failed to "exercise sufficient professional scepticism" by not investigating signs that the balances of rebate debtors may have been overstated, the FRC added.
Both Deloitte and Manning cooperated with the FRC's investigation, it said.
"We are disappointed that our work on the FY15 and FY16 SIG plc audits - relating to the audit of supplier rebates and cash - fell short of the high standards expected of us," a Deloitte UK spokesperson said. "We have learnt from the matters identified by the FRC and remain committed to audit quality and its continuous improvement."
Reuters could not reach Manning for comment.
($1 = 0.8258 pounds)