Grant Thornton, the accountancy firm has been fined £3 million for misconduct over its audits of the company that makes ‘Vimto’, Nichols and the University of Salford.  This is the reduced settlement figure. The original fine was £4 million.

It was reported in the Evening Standard that the Financial Reporting Council (FRC) said the misconduct related to the appointment of former senior partner Eric Healey to the companies’ audit committees, despite being employed at the same time to provide consultancy work, creating “serious familiarity and self-interest threats”.

The FRC said it had fined Mr Healey £200,000 – discounted to £150,000 on settlement – and excluded him from the Institute of Chartered Accountants for five years.

The Financial Reporting Council.   “The case also revealed widespread and serious inadequacies in the control environment in Grant Thornton’s Manchester office over the period as well as firm-wide deficiencies in policies and procedures relating to retiring partners.”

The fines come as auditors are under heavy scrutiny following a string of scandals and amid concerns over conflicts of interest and a lack of competition.

The FRC has called for an inquiry into whether the Big Four accountancy giants — Deloitte, EY, KPMG and PwC — should be broken up, with their audit divisions spun off.

The FRC said its investigation found misconduct over Grant Thornton’s financial statements of Nichols and the University of Salford for years ending 2010, 2011, 2012 and 2013.

It said Mr Healey’s employment as a consultant as well as auditor resulted in the “loss of independence” of eight audits over the course of the four years.

The FRC added: “The case also revealed widespread and serious inadequacies in the control environment in Grant Thornton’s Manchester office over the period as well as firm-wide deficiencies in policies and procedures relating to retiring partners.”

Grant Thornton will also have to pay a further £165,000 to cover the FRC executive counsel’s costs.

It said Mr Engel will receive a severe reprimand and a fine of £75,000, while Mr Barnes and Ms Kearns will be fined £52,500 and £45,000 respectively. All the fines were discounted for settlement.

A spokesman for Grant Thornton said: “Whilst the focus of the investigation was not on our technical competence in carrying out either of these audit assignments, the matter of ethical conduct and independence is equally of critical importance in ensuring the quality of our work and it is regrettable that we fell short of the standards expected of us on this occasion.”