The audit of a UK local authority pension fund that did not live up to expectations has led to Grant Thornton being fined.

The Financial Reporting Council’s (FRC) enforcement committee found failures in the audit, “which it considered represented a significant departure from the standards expected of a Registered Auditor and had the potential to affect the public, employees, pensioners or creditors,” the regulator announced today.

The failures included obtaining insufficient audit evidence that the value of investments was materially accurate.

The FRC also said its enforcement committee found two uncorrected material errors that appeared in the version of the pension fund’s audited financial statements that was included in the local authority’s annual report. The FRC said the errors did not appear in the pension fund’s own financial statements.

The audit in question was for the year ending 31 March 2021. The pension fund in question was not named.

The FRC said the enforcement committee decided it was necessary to sanction Grant Thornton “to ensure its local audit functions are undertaken, supervised and managed effectively”.

Grant Thornton has accepted a regulatory penalty of £40,000, lowered from £50,000 for co-operation and other mitigating factors. The firm has also made written undertakings that the FRC will monitor.

“The Committee acknowledges that Grant Thornton UK LLP provided co-operation, including at an early stage, took appropriate remedial steps promptly once the failing was identified and demonstrated contrition,” the FRC said.

“There was also no evidence to support financial gain or benefit from the failure.”