Forvis Mazars has been fined £600,000 by the UK's Financial Reporting Council (FRC) for "pervasive" audit failings during the 2020 and 2021 financial years. These shortcomings impacted the audit of a UK subsidiary of a large listed company. The FRC's investigation specifically highlighted deficiencies in several key areas, including revenue recognition, inventory valuation, and the assessment of goodwill impairment, indicating a systemic problem rather than isolated errors. The penalty was originally set at £900,000 but was reduced by 30% due to Mazars' cooperation and admissions during the investigation. Individual audit partners involved were also subject to sanctions, including fines and non-financial penalties.
The FRC's sanctioning decision was influenced by the severity and widespread nature of the audit failures, which demonstrated a lack of diligence and professional skepticism. The regulator stressed that these were not minor technical issues but fundamental lapses in audit quality. This incident adds to a series of recent criticisms directed at Forvis Mazars and other mid-tier firms, raising concerns about their capacity to handle complex audits of larger entities, particularly given the market's push for more competition beyond the 'Big Four'.
This follows prior instances where Mazars faced similar scrutiny and penalties. For example, in 2023, the FRC fined Mazars £72,000 for "wide-ranging" audit failings related to convertible loan notes in an unnamed company's audit from the Crown dependencies accountingweb.co.uk. More recently, in July 2024, the FRC called out Forvis Mazars and BDO, stating their audit quality had fallen significantly, with Forvis Mazars' results declining from 56% to 44% in their annual review, compared to an overall audit quality of 74% for all firms ft.com. The FRC warned of stronger action, including potentially removing permission to audit listed companies, if improvements are not seen in 2025 reuters.com.
