Big 4 firms and former partners fined £5m for Eddie Stobart audit failings

The Financial Reporting Council has handed down fines totalling more than £5m to two firms and its former partners for failures in the audits of Eddie Stobart Logistics.

KPMG and the former head of its Manchester office Nicola Quayle, and PwC and its former audit partner Phil Storer have been punished, three years after an investigation was launched by the regulator.

Eddie Stobart’s shares were suspended for six months from August 2019 after a £2m error was uncovered in its 2018 accounts.

KPMG performed the 2017 audit of the AIM-listed business, before resigning because of a breakdown in its relationship with ESL’s management which resulted from difficulties in obtaining sufficient appropriate audit evidence. PwC then took over for the 2018 audit.

The audit failings related to the disclosure of property transactions entered into by Eddie Stobart – which resulted in the company declaring a profitable performance – as well as dilapidations and accounting for a subsidiary company.

The FRC’s deputy executive counsel Claudia Mortimore said the case “highlights the importance of the auditor’s work in ensuring that disclosures in financial statements enable users to understand the impact of particular transactions on the entity’s financial performance”.

PwC was fined £3.5m for “numerous, serious and pervasive failings”, which was discounted to £1.99m for its co-operation. Storer, who spent five years with PwC in Manchester before leaving in October 2021, was fined £90,000, reduced to £51,200.

KPMG was fined £1.35m, reduced to £877,500, and issued with a severe reprimand, while Quayle was fined £70,000, reduced to £45,500. She has previously been fined for her role in the audits of former Bargain Booze owner Conviviality, and left KPMG in November 2021.