STORY
The UK’s Financial Reporting Council (FRC) has initiated an investigation into Ernst & Young (EY) concerning its audits of the Post Office’s financial statements from 2015 to 2018. The probe focuses on EY’s compliance with auditing standards, particularly in relation to the Horizon IT system, which has been central to a significant miscarriage of justice involving over 900 sub-postmasters. The Horizon system, developed by Fujitsu, was implemented by the Post Office in 1999 and erroneously indicated financial discrepancies, leading to wrongful prosecutions for theft and false accounting. Despite the Post Office not being classified as a public interest entity, the FRC has taken the unusual step of intervening due to the substantial public interest and the gravity of the scandal.
The investigation follows a comprehensive public inquiry into the Horizon affair, which concluded its oral hearings recently. The inquiry has already cost over £50 million, and while the government has allocated £1.8 billion for compensation, many affected individuals are still awaiting restitution. EY has acknowledged the FRC’s investigation and has pledged full cooperation. The firm emphasised its commitment to upholding high auditing standards and supporting the ongoing efforts to address the consequences of the Horizon scandal.