December 9, 2022

The UK accounting regulator has launched an investigation into audits by mid-tier firm MHA MacIntyre Hudson of a subsidiary of commodities business Monaco Resources Group.

The Financial Reporting Council said its investigation would cover MHA’s audits of the financial statements of MRG Finance UK for 2018 and 2019.

It is the latest probe into a mid-tier accounting firm ahead of a planned shake-up of the UK audit market, aimed in part at handing more work to smaller rivals of the dominant Big Four: Deloitte, EY, KPMG and PwC.

MHA MacIntyre Hudson, part of Baker Tilly International, is the 11th largest auditor of London-listed companies by market value, signing off the accounts of 13 companies worth £3.5bn, according to figures compiled by Adviser Rankings in November.

It caught the attention of larger rivals by taking on the audits of FTSE 250 mining groups operating in Ukraine and Russia that were dropped as clients by Big Four firms.

It was appointed as auditor of Ferrexpo in 2019 after the previous auditor Deloitte resigned over links between the company’s boss and a charitable foundation. The following year, it was hired by Petropavlovsk after PwC resigned, citing governance concerns.

The FRC’s conduct committee decided to launch the probe at a meeting in November but did not give details about which aspects of the audits were being investigated.

“MRG Finance UK plc is not subject to investigation by the FRC,” the regulator said. Failures in an audit do not necessarily mean there were errors in the published accounts.

MRG Finance UK, which has a registered address in west London, was incorporated in 2018 to issue publicly traded debt to raise funds for other companies in the Monaco Resources Group. The bonds were guaranteed by the parent company of the Monégasque natural resources group, which has more than 5,000 employees operating in 48 countries, according to its most recent half-year results.

MRG Finance UK’s accounts for the year to December 31 2020 have been overdue at Companies House since the end of September 2021. Companies House filings show that an action to strike the company off the register was discontinued in December.

Monaco Resources Group said the action to strike MRG Finance UK off the register had been discontinued because it had now filed its accounts for 2020. It added that it had also refiled its accounts for 2018 and 2019 as these had previously been stated in sterling rather than euro. The 2020 financial statements and the refiled 2018 and 2019 accounts were awaiting processing by Companies House, it said.

Monaco Resources Group, whose businesses span metals, agribusiness, energy and logistics, reported a pre-tax loss of €2m on revenues of €704m in the six months to June 2020.

MHA MacIntyre Hudson said it was fully co-operating with the FRC and was “committed to ensuring that excellent audit quality is at the heart of our business”.

https://www.ft.com/content/e86f8d72-918c-4a80-a4bf-de3110316076