Outcome of disciplinary case against Grant Thornton UK LLP, Alastair Nuttall and Marcus Swales 

The Financial Reporting Council (FRC) announces the outcome of the disciplinary case in connection with Grant Thornton UK LLP (Grant Thornton), Alastair Nuttall and Marcus Swales, Audit Engagement Partners in relation to Manchester Building Society.

Settlements agreed amongst the Executive Counsel to the FRC, Gareth Rees QC, Grant Thornton, Alastair Nuttall and Marcus Swales have been approved by a legal member of the FRC Tribunal. Those concerned admitted that their conduct fell significantly short of the standards reasonably to be expected of a Member Firm and Member as set out in the Particulars of Fact and Acts of Misconduct.

Following an investigation under the Accountancy Scheme into the fair value hedge accounting and auditing of interest rate swaps and related mortgages at Manchester Building Society, which gave rise to a prior period adjustment in its financial statements for the year ended 31 December 2012, the parties agreed the following terms of settlement:

• A Fine of £975,000 in respect of Grant Thornton;
• Grant Thornton to receive a Severe Reprimand;
• A sum of £85,000 to be paid by Grant Thornton as a contribution to the Executive Counsel’s costs;
• A Fine of £39,000 in respect of Mr. Nuttall;
• Mr. Nuttall to receive a Reprimand;
• A Fine of £45,500 in respect of Mr. Swales;
• Mr. Swales to receive a Severe Reprimand.

Paul George, FRC Executive Director of Conduct said:

“This outcome sends a clear message to accountants and accountancy firms involved in the audit of hedge accounting of their responsibility to carry out professional work diligently and in accordance with the applicable technical standards. These results demonstrate our commitment to ensure the standards of the profession are upheld so that it can justifiably secure public confidence.”

Source: FRC – Outcome of disciplinary case against Grant Thornton UK LLP, Alastair Nuttall and Marcus Swales

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