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Ernst & Young fined more than £2 million by FRC in relation to Stagecoach audit failings

27th Aug 2021

Jessica Sutherland acted in the recent regulatory proceedings concerning Ernst & Young’s 2017 audit of Stagecoach, including in relation to Stagecoach’s troubled acquisition (run jointly with Virgin Trains) of the rail franchise for the East Coast Mainline.

The FRC investigated Ernst & Young (EY), and former audit partner, Mark Harvey, and issued a Financial Decision Notice against both respondents, which included financial sanctions and severe reprimands for both parties.

EY was given a severe reprimand, and fined £3.5 million, discounted following mitigation, early admissions and early disposal to £2.2 million. EY was also required to report to the FRC for one year in respect of audit work performed in relation to onerous contract provisions.

Mark Harvey was fined £100,000 (likewise, discounted, as above, 30% to £70,000); and given a severe reprimand.

Jessica was sole counsel acting for the FRC.

A copy of the Financial Decision Notice can be found here. The FRC’s findings were reported by the BBC and the Financial Times.