A senior statutory auditor has also been fined.

Big Four financial services firm Ernst & Young (EY) has been fined £2.75 million ($3.66 million) and reprimanded by the Financial Reporting Council after admitting misconduct in relation to the audit of the financial statements of Tech Data Limited (formerly known as Computer 2000 Distribution Limited), for the financial year ended 31 January 2012.  

Julian Gray, senior statutory auditor and audit engagement partner at EY, has also been fined and reprimanded by the FRC, the council said in a statement.

The action taken follows the conclusion of the investigation by the executive counsel to the FRC, which was announced in August 2014.

The FRC added that EY and Gray, a member of the Institute of Chartered Accountants in England and Wales (ICAEW), have admitted that their conduct fell significantly short of the standards reasonably to be expected of a member and a member firm and that they failed to act in accordance with the ICAEW’s fundamental principle of professional competence and due care. 

"The admitted acts of misconduct related to three audit areas, and included failures to obtain reasonable assurance about whether the financial statements as a whole were free from material misstatement, failures to obtain sufficient appropriate audit evidence and failures to exercise sufficient professional scepticism," the FRC said.

The FRC’s executive counsel has agreed the following terms of settlement with EY and Gray, which have been approved by a legal member of the independent tribunal panel:

• EY to receive a reprimand and a fine of £2,750,000 (adjusted for mitigating factors and discounted for settlement to £1,800,000)
• Gray to receive a reprimand and a fine of £90,000 (adjusted for mitigating factors and discounted for settlement to £59,000)
• EY to pay a sum of £225,000 towards executive counsel’s costs