FRC to investigate financial statements of SIG

The Financial Reporting Council (FRC) has launched an investigation into financial statements of construction materials supplier SIG.

The inquiry centres around the audit by Deloitte of the company’s accounts for the years ended 31 December 2015 and 2016.

The FRC said the investigation will be conducted under the Audit Enforcement Procedure (AEP) and will focus on the audit of cash and supplier rebates.

It has delegated the investigation to the Institute of Chartered Accountants in England and Wales (ICAEW), which is Deloitte’s Recognised Supervisory Body (RSB), in accordance with the AEP.

A Deloitte spokesperson said: “We will co-operate fully with this investigation. Quality is integral to our audit work and we are committed to continued improvement in audit quality through investments we’ve been making and programmes we have in place.”

In February 2018, SIG suspended a number of staff after discovering an overstatement of profit in prior financial years.

The company, together with external auditors Deloitte and from KPMG, conducted a forensic review of the recoverability of a number of balances recognised at 31 December 2016 in relation to rebates and other potential recoveries from suppliers.

It found that a number of these balances were overstated at 31 December 2016, “in some cases intentionally”.

The news comes as the Financial Conduct Authority ended its investigation into Deloitte’s auditing work at facilities services contractor Mitie Group.

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