EY investigated by watchdog over audit of Post Office’s Horizon system

EY is being investigated by the UK accounting watchdog over the way it evaluated the accounts of the Post Office, focusing on the computer system which was at the centre of the Horizon scandal.

The Financial Reporting Council (FRC) said it had started looking at the audits conducted between March 2015 and March 2018.

The investigation will have a “particular reference to matters related to the Horizon IT system”, the regulator said, focusing on auditing standards rather than the broader issues related to the software.

More than 900 subpostmasters were prosecuted between 1999 and 2015 after faulty Horizon accounting software made it look as though money was missing from their accounts.

Many are still awaiting compensation despite the previous government announcing that those who have had convictions quashed are eligible for £600,000 payouts.

A lengthy public inquiry into the scandal has shown the Horizon software was faulty and created false shortfalls in their accounts.

The FRC said it waited to open its investigation until public hearings carried out as part of the inquiry were complete, although the formal findings are still to be outlined in a report.

A spokesman for EY said it takes its “public interest responsibilities extremely seriously” and it would be “fully co-operating” with the FRC in its investigation.

EY was hit with a £4.9 million fine by the FRC last week for breaching auditing standards when it checked the accounts of Thomas Cook before the high street travel agent collapsed in 2019.