HW Fisher sanctioned over GFG Alliance audit lapses

The Financial Reporting Council (FRC) has imposed a £200,000 fine on HW Fisher LLP and its lead auditor, Simon Mott-Cowan, for significant professional failures during an audit of Liberty Commodities, a subsidiary of metals magnate Sanjeev Gupta's GFG Alliance. The regulator identified seven key audit areas where HW Fisher and Mott-Cowan demonstrated a severe lack of professional skepticism, including issues related to revenue recognition, debt recoverability, and going concern assessments.

The firm failed to grasp Liberty Commodities' business model, which heavily relied on back-to-back sales and supply chain finance facilities from Greensill Capital UK and Wyelands Bank, both part of GFG Alliance. The collapse of Greensill Capital in 2021, linked to Gupta's GFG Alliance, and the subsequent imposition of a £4.5 million fine on PwC for its audits of Wyelands Bank further underscored the risks associated with this business model.

The FRC's investigation, initiated in February 2022, resulted in the regulator imposing a fine on Mott-Cowan of £25,000, reduced to £17,500 upon admission, and formally declaring his failure to meet professional standards. Mott-Cowan subsequently retired from all audit work at the end of 2025. The case highlights the critical importance of auditors' understanding of the entities they audit and the potential consequences of failing to do so, particularly in the face of public scrutiny and potential risks to the financial stability of the audited company.