National accountancy firm MHA MacIntyre Hudson, which has a wealth management arm, has been fined by the accountancy watchdog for audit breaches over a company that listed bonds on the stock market.

MHA is the UK arm of the global consulting firm Baker Tilly International.

MHA is a major firm of accountants, tax and business advisers but has made acquisitions to build its UK wealth management arm, including taking over veteran Northampton IFA Cave & Sons in 2022 and relaunching it as MHA Caves Wealth.

MHA MacIntyre Hudson has been fined £200,000 by the accountancy regulator Financial Reporting Council while a former partner in the firm and a former employee were also fined for their parts in the breaches.

The £200,000 MHA fine was discounted for mitigation, admissions and early disposal to £120,250.

Former MHA partner Deborah Weston was fined £30,000, which was discounted to £19,500, while former employee Geeta Morgan was fined £25,000, discounted to £18,750.

The breaches are not related to the firm's wealth management arm.

The FRC said the breaches concerned the firm’s audits of the financial statements of MRG Finance UK PLC for the financial period ending 31 December 2018 and the financial year ended December 31 2019.

MRG Finance was incorporated on 3 May 2018 to issue bonds to raise finance for its parent company, a business focused on natural resources with interests in agribusiness, logistics and technology.

The FRC said the MHA audits failed to identify that the company was a public interest entity because, although it had not listed its shares, it had listed the bonds on the London Stock Exchange debt market.

The FRC said: “The failure to gain an adequate understanding of the company, and the regulatory framework applicable to it, led directly to further breaches of relevant requirements.”

Claudia Mortimore, deputy executive counsel at the FRC, said: "This case highlights the importance of auditors conducting robust checks at the acceptance and continuance stage of any audit engagement.

“The auditors did not obtain a clear understanding of the audited entity’s characteristics and failed to properly consider these issues afresh when continuing that engagement. The conclusions reached at these stages are crucial in determining whether a firm is able to perform an audit and the manner in which the audit should be conducted.

“To support high quality audit, it is vital these stages are completed in a robust and detailed manner.”