EY UK has been fined for the second time in a week by the Financial Reporting Council (FRC), marking a further setback for the audit giant as it faces continued scrutiny over its professional standards.
The latest sanction — a £500,000 fine, reduced to £325,000 for cooperation — relates to breaches of mandatory audit rotation rules during EY’s 2019 audit of Stirling Water Seafield Finance, a company that manages wastewater treatment in Scotland. The firm failed to rotate key audit partners in line with ethical requirements, undermining the perceived independence of its work.
This follows a separate £4.4 million fine issued days earlier for failures in auditing London-listed transport group Stagecoach. That case involved material errors in revenue recognition and provisions for liabilities, which the FRC said reflected systemic weaknesses in EY’s quality control systems.
The back-to-back penalties have raised fresh questions about governance across the Big Four audit firms and their ability to manage conflicts of interest. EY has agreed to a root-cause review and committed to enhancing its internal controls, but industry commentators suggest regulatory pressure is likely to intensify.
The FRC, which has pledged to crack down on audit lapses, said it would continue to pursue enforcement where public trust in financial reporting is at stake.
