I remember being deathly afraid of getting into trouble in elementary school because if you were called to the principal’s office, chances are you would get a swat or two on the buttocks from his spanking paddle. Well the U.K.’s Financial Reporting Council has taken its paddle out of the drawer, put it on the desk, and is ready to spank some EY heinie if it finds that the Black and Yellow should be punished for bad auditing.
EY is being investigated by the UK accounting watchdog over its audit of NMC Health, which collapsed into administration after revealing more than $4bn of hidden debt amid allegations of fraud.
The Financial Reporting Council on Monday said it had last month opened a probe into the 2018 audit of NMC Health’s financial statements.
The move means that EY will be dragged into one of the biggest accounting scandals to have hit the City of London in recent years, with questions being asked by regulators, investors, and former managers about who was to blame for the sudden collapse of a former FTSE 100 company worth more than £4bn this time last year.
Last week, Bavaguthu Raghuram Shetty, the Indian billionaire who founded NMC Health and resigned as co-chair earlier this year, blamed a small number of current and former executives for the alleged fraud, The Guardian reported.
The FRC is hoping to complete its EY/NMC Health investigation within two years. And let’s not forget about the FRC’s ongoing investigation of EY as auditor of travel company Thomas Cook, which went down the tubes last year.
But who am I kidding. The FRC doesn’t dole out ass spankings, just slaps on the wrist.
Watchdog investigates EY audit of NMC Health [Financial Times]
Watchdog investigates EY audit of scandal-hit NMC Health [The Guardian]