Farepak fine won’t help firm’s savers
THE fine that auditors of Farepak must pay for poor performance, will do little to soften the financial blow savers suffered, it is claimed.
The auditors of the collapsed Christmas savings club have been ordered to pay more than £1m in fines and costs.
The company, which was based in Swindon, went into administration in 2006, leaving 116,000 people with total losses of £37m. Each lost on average about £400.
Anne Snelgrove, Labour’s Prospective Parliamentary Candidate for South Swindon, said: “This is of little comfort for the savers. This has come so late after they lost their money it does demonstrate they were let down by the state and systems that should’ve protected them.
“It’s all well and good to fine the company but that doesn’t give the savers their money back.”
Farepak, which was set up in 1969, allowed customers to pay in money on a monthly basis to for hamper deliveries at Christmas.
The Financial Reporting Council has fined Ernst & Young £750,000 with costs of £425,000.
Auditor Alan Flitcroft, who worked for the accountants, was fined £50,000. Ernst & Young and Mr Flitcroft, who were also formally reprimanded by the FRC, admitted their auditing fell below the expected standard.
Paul George, of FRC, said: “The FRC is pleased with the outcome of this case, which sends a clear reminder to all accountantsthat they have a responsibility to carry out their work with due skill, care and diligence in the audit of subsidiary entities and obtain corroborative evidence to support management representations.
“The result underlines the FRC’s commitment to ensure the accountancy profession has proper regard for the professional standards expected of members.”
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