Settlement Agreements have been reached with Ms Teresa Morahan and Mr Stephen McCallion
The investigations concerned the audit of the financial statements North of England P&I Designated Activity Company for the year end 20 February 2023.
The Authority has decided to impose a Reprimand and a Fine of €16,800 on Ms Teresa Morahan. In respect of Mr Stephen McCallion the Authority has decided to impose a Reprimand and a Fine of €16,800.
The investigation of Ms Teresa Morahan related to her role as the engagement partner for this statutory audit. In respect of the investigation of Mr Stephen McCallion, it concerned his role as the EQCR for this audit.
IAASA’s investigation concerning Ms Morahan identified a number of areas of non-compliance with international standards on auditing including; overall objectives of the independent auditor, quality control for an audit of financial statements, responsibilities relating to fraud, responses to assessed risks, audit evidence, related parties, communication with Those Charged with Governance (TCWG), forming an opinion and reporting on financial statements, and communicating Key Audit Matters (KAM) in the independent auditor’s report. In respect of Mr McCallion the investigation identified non-compliance with international standards on auditing relating to quality control for the audit of these financial statements where his role was to perform an objective evaluation of the significant judgments made by the engagement team, and the conclusions reached in formulating the auditor’s report.
Commenting on the publication of the settlements, IAASA CEO Kevin Prendergast said; “This investigation uncovered a number of significant deficiencies in how the audit was undertaken. Amongst these was a reliance on group financial data without sufficient audit work being carried out to support the entity’s own results. There was also insufficient challenge of management and other parties providing key information and insufficient work undertaken in relation to material financial statement disclosures. Quality auditing requires an independent and challenging mindset at all times and this was not evident in this case. The engagement quality control review partner is tasked with ensuring that the audit is properly carried out and so also bears responsibility for audit failures.”
The settlement agreement for Ms Teresa Morahan is available here.
The settlement agreement for Mr Stephen McCallion is available here.