EY probed by watchdog over audit of collapsed Made.com

The ‘big four’ accounting giant is under investigation over its evaluation of the retailer’s 2021 accounts.

(MADE.com/PA)

EY is under investigation by the UK accounting watchdog over how it evaluated the finances of collapsed furniture retailer Made.com.

The Financial Reporting Council (FRC) said it has launched a probe into the “big four” accounting giant – which also counts PwC, Deloitte and KPMG in the ranks – in relation to the auditing of financial statements of Made.com during 2021.

Made.com fell into administration last year, resulting in hundreds of redundancies after it was hammered by rising costs and waning consumer spending.

It marked a sharp demise for the retailer that launched on the London Stock Exchange in June 2021, valued at some £775 million and with an initial public offering (IPO) at 200p a share.

Its value plunged by roughly 95% in a year, and its share price sunk to around 0.5p by the time it was suspended from the market.

The FRC will also be probing a possible breach of the fee cap requirements during an EY audit of another company in 2021.

The requirements allow auditors to provide other services to their customers up to a certain point, to protect their independence when checking accounts.

The watchdog did not provide any details about the investigations on Thursday.

EY said it had been notified of the probe, and a spokesperson said: “We will be fully cooperating with the FRC during their inquiries. It would be inappropriate to comment further at this time.”

Earlier this week, EY announced it was cutting 3,000 jobs in the US after seeing “overcapacity” in parts of the firm and assessing the impact of economic conditions.

It amounts to about 5% of the firm’s US workforce, but there are no plans for similar job cuts in the UK, it confirmed.

The accounting giant has been in hot water with the UK regulator before over its audits of different companies.

It is already under investigation after signing off the books of failed mini-bond scheme London Capital and Finance, and over collapsed package holiday giant Thomas Cook.

In 2021, it was fined £3.5 million, in part for failing to properly challenge the management of Stagecoach when evaluating its 2017 accounts.