When Globo went into administration amid allegations of a financial scandal, one company was probably looking on nervously. The implosion of the Greek mobile phone software company, listed in the capital, drew the attention of the Serious Fraud Office, the City of London Police and the Financial Conduct Authority – a triple whammy of just whose attention you really don’t want. So Grant Thornton probably isn't surprised that questions are now being asked about its role as Globo’s auditor.
The Financial Reporting Council announced it has launched a formal investigation into events at the professional services firm, specifically its audits of Globo's accounts for 2013 and 2014. It will decide whether there is evidence of any misconduct by Grant Thornton, which replaced BDO in March last year, following a competitive tender of three of the top five auditing firms.
‘We acknowledge the FRC’s announcement that it has launched an investigation into our audits of Globo,' a Grant Thornton spokesperson said. ‘Administrators have been appointed over the company by court order and are seeking to establish what has happened to the business. We await the outcome of their inquiries.’
Aim-listed Globo quickly plunged into crisis in October, when its CEO Costis Papadimitrakopoulos (try saying that after a glass of ouzo) and finance chief Dimitris Gryparis resigned after notifying the board of ‘falsification of data and the misrepresentation of the company’s financial situation’. The company was soon placed into administration, with its nominated adviser RBC Europe resigning along with its independent directors.
If the regulator decides to make a formal complaint against the auditing firm it will be heard by an independent tribunal, where fines could await. Which Grant Thornton knows all about – it did pay £975,000 for shortcomings in its audits of Manchester Building Society earlier this year after all. At the time, the FRC said Grant Thornton’s staff admitted their conduct ‘fell significantly short of the standards reasonably to be expected’ when advising on accounting for its interest rate hedging swaps. Two partners at the firm were also fined.
The FRC has two further active investigations into the accountant, relating to audit issues at Nichols and AssetCo. So, a busy Christmas period for Grant Thornton then, but not for the reasons it would have hoped.