The Financial Reporting Council has opened an investigation into Mazars’ audit of clothing chain French Connection.
The audit watchdog said on 6 October it was probing Mazars’ audit of London-listed French Connection’s accounts for the year ended 31 January 2020.
French Connection said on 4 October it had agreed to a takeover that values the business at £29m after years of lossmaking.
The FRC said the decision to launch the investigation was taken by a meeting of its conduct committee on 20 July. It said the investigation would be carried out by its enforcement division.
A spokesperson for Mazars said: “Mazars can confirm that the FRC has commenced an investigation in relation to the audit of French Connection Group PLC for the year ended 31 January 2020. Mazars is cooperating fully with the regulator and, respecting client confidentiality and due process, will provide no further comment during the course of the investigation.”
In its 2021 audit quality inspection report the FRC said three of the seven audits it reviewed at Mazars needed more than limited improvements.
The FRC said in its report that Mazars was “genuinely committed to improving audit quality”, but said it “must put in place the necessary building blocks for the consistent execution of high quality audits”.
In October 2020 the FRC criticised Mazars and Grant Thornton for poor quality audits of major public sector bodies.
In the year to 31 August 2020 Mazars grew its UK revenue to £204.6m, the first time it had exceeded £200m.
The firm’s operating profit fell from £35.2m to £31m, in the same period.
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