EY is under investigation by the UK accounting watchdog over its auditing of Made.com, the online furniture retailer that collapsed into administration last year.
The Financial Reporting Council said on Thursday that its probe would cover the Big Four firm’s audit of the company’s accounts for the year ended December 2021. It did not provide details on the focus of its investigation.
Made.com, which was founded by entrepreneurs Ning Li and Brent Hoberman in 2010, boomed during the pandemic thanks to its design-led furniture that proved popular with younger consumers.
However, supply chain bottlenecks forced the company to hold more of its inventory as demand eased, leading to multiple profit warnings. The group collapsed into administration in November.
EY said it would fully co-operate with the FRC’s investigations.
The regulator added it had opened a separate investigation into EY over a potential breach of fee cap regulations relating to its audit of another, unnamed company in 2021.
Auditors are allowed to provide a limited range of other services to the clients whose accounts they check, but the rules cap the value of this work to protect their independence. The cap is generally set at 70 per cent of the average audit fee over the past three years.
The issue was identified by EY, which reported itself to the regulator, said a person familiar with the matter.
The firm is already under investigation over its audits of Thomas Cook, NMC Health and London Capital & Finance, all of which have collapsed in recent years.
In January, it was placed under investigation over its audits of Scottish water company Stirling Water Seafield Finance.