EY Fined Over Audit Failures in Made.com's 2021 Financial Statements
The UK’s Financial Reporting Council (FRC) has fined EY £1.2 million and audit partner Julie Carlyle £49,000 for failing to meet international auditing standards during the audit of e-commerce firm Made.com in 2021. The FRC found that both parties breached requirements related to going concern assessments and deferred tax asset evaluations. In addition to financial penalties, EY and Carlyle received a published 'severe reprimand' and were ordered to cover investigation costs. Made.com faced significant challenges post-pandemic in 2022 due to supply chain disruptions and declining consumer demand, leading to substantial losses. The company entered administration on November 8, 2022. EY later issued a disclaimer of opinion for Made.com’s FY2022 interim financial statements citing material uncertainty about the firm's going concern status. The FRC emphasized that auditors must challenge management forecasts and gather sufficient evidence to ensure accurate financial reporting. This case follows similar enforcement actions against Forvis Mazars over audit failures at Studio Retail Group.
Topics: auditing standards financial regulation FRC penalties