Northern Ireland chartered accountants Moore Stephens have been fined by the Financial Reporting Council (FRC) over the auditing of the collapsed Presbyterian Mutual Society (PMS).
The firm was given a £200,000 fine, discounted for settlement to £140,000, and a reprimand following failures in the audit of the financial statements for years ending 2007 and 2008.
Audit partner David McClean was fined £29,000, discounted for settlement to £20,000, and also given a reprimand.
Almost 10,000 Presbyterians lost their savings when the PMS was forced into administration in November 2008. A rescue package underwritten by the UK Government and the Stormont Executive was agreed in 2011.
The disciplinary tribunal highlighted a number of failings on the part of the firm and audit partner. These included:
Failing to obtain an adequate general understanding of the legal and regulatory environment in which PMS operated for the purposes of the audit.
Failing to adequately test the assumption of PMS's board and management that it was complying with its own rules and with applicable regulation.
Failing to apply professional scepticism and to obtain sufficient audit evidence to corroborate assurances by management.
During the 2008 audit, the FRC investigation found further shortcomings, namely:
Failure to adequately test management's assertions that the inadequacy of the liquidity levels at the 2008 year end would be remedied.
Insufficient evidence to conclude that the going concern assumption was appropriate and that PMS's lack of liquidity had no impact on the audit opinion.
The tribunal found that Moore Stephens (NI) and McClean admitted failing to act in accordance with the principles of professional competence and due care, and that their conduct fell significantly short of the standards reasonably to be expected.
Previously, the FRC issued a reprimand to Philip Black, non-executive former director at PMS and a member of the Institute of Chartered Accountants Ireland, who was also asked to pay £50,000 as a contribution to costs.
In a statement Moore Stephens said it had fully co-operated with the investigation, adding: "We very much regret that the FRC found that our audits in these years fell below our usual high standards. We are pleased that the FRC accepted that our partners and staff were not engaged in behaviour that was dishonest, deliberate or reckless.
"Moore Stephens strongly agrees with the FRC finding that the primary responsibility for rule compliance lay with the management, not the auditors."
The company also said that Mr McClean left the firm by mutual consent in August 2011.
Three years ago the Department of Enterprise, Trade and Investment was accused of failing to properly scrutinise the activities of the PMS before it collapsed.