The accountancy firm formerly known as Ernst & Young has been fined £2.75 million (US$3.66 million) and reprimanded by the UK's Financial Reporting Council after admitting misconduct in relation to the audit of the financial statements of Tech Data Ltd.

Julian Gray, senior statutory auditor and audit engagement partner at EY, has also been fined and reprimanded by the FRC, according to a council statement. The audit in question was in relation to Tech Data Ltd, (formerly known as Computer 2000 Distribution Limited), for the financial year ending 31 January 2012. 

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); and
• EY to pay a sum of £225,000 towards the executive counsel’s costs.