Deloitte audit of stricken retailer Joules to be investigated

An investigation has been launched into Deloitte’s audit of retailer Joules for the year ending 30 May 2021.

The accounting giant signed off the embattled retailer’s accounts before it filed for bankruptcy last year. 

The Financial Reporting Council said on Tuesday the investigation will be conducted by its Enforcement Division under the Audit Enforcement Procedure, following a decision its Conduct Committee on 20 March 2023. 

Probe: The FRC has launched an investigation into a Deloitte audit of Joules

A spokesperson for Deloitte said the group would ‘co-operate fully with the Financial Reporting Council’s investigation’ and remained ‘committed to the highest standards of audit quality’. 

Joules was rescued from bankruptcy by high street stalwart Next in a £41million move which saved around 1,450 jobs. 

But, while Next is looking to relaunch the brand later this year through its Total platform, last month it announced that it had launched a fresh consultation on job cuts.

As part of the deal to save the retailer in December, founder Tom Joule, who set up the group in 1989, took a 26 per cent stake in the company. 

Leicestershire-based Joules struggled to survive as the pandemic hit the retail sector sector hard and triggered a major drop in footfall. 

Stricken: Joules struggled to keep its finances and footfall afloat 

In December, Deloitte was fined over £900,000 by the accounting watchdog after failures in its audit of the building materials group SIG.

The FRC also handed a fine of £36,250 to Simon Manning, who was the audit engagement partner working on the account.

Deloitte’s initial fine was £1.25million but the figure was reduced after the firm admitted the breaches. Manning’s fine was trimmed from £50,000 to £36,250.

Jamie Symington, deputy executive counsel for the FRC, said: ‘These breaches concerned two discrete areas of the audit of a particular subsidiary of SIG plc. 

‘They involved contraventions of requirements which are fundamental to the role of the independent auditor, and were associated with material misstatements in SIG plc’s accounts which had to be corrected.

‘The breaches in respect of supplier rebates were made all the more serious by the fact that the FRC had highlighted these complex supplier arrangements as requiring particular attention from auditors.’

In September 2020 Deloitte was fined £15million and severely reprimanded for failings in its audits of the software company Automated between January 2009 and June 2011.