The accountancy firm Grant Thornton has been fined £1.95m by the industry regulator for failures during its auditing of the drinks group Conviviality, the owner of off-licence chains including Bargain Booze, which collapsed in 2018. The Financial Reporting Council (FRC) said the fine had been reduced from £3m for admissions and early disposal, but it criticised Grant Thornton for failing to comply with ethical standards and requirements between 2014 and 2017. The watchdog also found that Grant Thornton lost its independence in its audit of Conviviality during the financial year which ended on 30 April 2014. The FRC said that the accountancy firm had admitted breaching audit standards and agreed to a package of measures to improve the quality of future audits, including the establishment of an ethics board to oversee compliance with ethical standards and increased ethics training for staff. Claudia Mortimore, the FRC’s deputy executive counsel, said compliance with ethical standards was vital for audit firms. “In this case, there were firm-wide failures over a number of years which not only led to numerous breaches of such requirements on individual audits but also the real risk of more such breaches which have not been, and will never be, reported or identified,” she said. Conviviality collapsed in the spring of 2018, although its retail division, including chains Wine Rack and Bargain Booze, was sold off in a pre-pack administration process. The FRC has previously criticised the quality of Grant Thornton’s work for the collapsed cake and cafe chain Patisserie Valerie, which is being investigated for alleged accounting fraud, calling it “unacceptable”. Last year Grant Thornton was found to be the worst performer in the FRC’s 2019 annual review of audits by the UK’s big accountants. The regulator said half of the eight Grant Thornton audits it inspected for 2017-18 required significant improvement. Grant Thornton, which has positioned itself as a challenger to the “big four” accountancy firms, was fined £650,000 by the regulator in December 2019 for breaches in its audit of a company that the FRC declined to name. Sweeping changes are on the horizon for the big four after they were told they have four years to fence off their audit divisions from the rest of their operations, as the regulator looks to rebuild confidence in the sector following high-profile corporate collapses including those of the outsourcing giant Carillion and retailer BHS. The FRC has told KPMG, PwC, Deloitte and EY that they have until June 2024 to separate off their auditing divisions. The watchdog is trying to improve oversight of corporate finances as part of a broader drive to overhaul the accounting profession. Three government-backed reviews into the accounting sector have been carried out, although none of them have so far resulted in legislation. The recommendation for the audit sector to become independent from the wider accounting profession was made by one of the reviews, led by the City grandee Sir Donald Brydon, as part of changes aimed at preventing future scandals. Brydon recommended in December 2019 that auditing should be treated as an independent profession, separate from accounting, “with its own governing principles, qualifications and standards”. The FRC said it had told accounting companies to lay out plans to improve their profession by October this year. MPs have previously queried whether accounting firms have an incentive not to ask difficult questions about the finances of companies that also pay them for other services.