FRC: Sanctions Against HW Fisher LLP and Simon Mott-Cowan Over Audit Failures

• The Financial Reporting Council imposed sanctions on HW Fisher LLP and Simon Mott-Cowan following an investigation.
• The sanctions relate to the statutory audit of Liberty Commodities Limited's financial statements for the financial year ended March 31, 2020.
• Numerous and serious breaches of key auditing standards were identified, stemming from a fundamental lack of professional skepticism.
• Simon Mott-Cowan voluntarily ceased his audit practice and will no longer perform audit work.
• The FRC concluded that the audit failed its principal objective to ensure the financial statements were free from material misstatement.

The FRC underscored the gravity of the situation, stating that the audit "failed in its principal objective to obtain reasonable assurance about whether LCL’s financial statements as a whole were free from material misstatement."

The Financial Reporting Council (FRC) has issued a Final Settlement Decision Notice under its Audit Enforcement Procedure, imposing sanctions against audit firm HW Fisher LLP (HWF) and statutory auditor Simon Mott-Cowan. These actions stem from an investigation into the statutory audit of Liberty Commodities Limited's (LCL) financial statements for the fiscal year ending March 31, 2020. The FRC's findings highlighted significant deficiencies in the audit work performed by HWF and Mr. Mott-Cowan.

The investigation concluded that the breaches identified were fundamental to HWF's audit processes, characterized by a pervasive lack of professional skepticism. While the FRC determined that these breaches were numerous and serious, affecting seven distinct areas of the audit, it explicitly stated that there was no suggestion of intentional, dishonest, deliberate, or reckless conduct on the part of the respondents. Furthermore, the FRC did not assert that LCL's financial statements were, in fact, misstated. Both HWF and Mr. Mott-Cowan fully cooperated with the FRC's investigation throughout the process.

The core of the audit's shortcomings lay in a failure to adequately address key auditing standards across multiple critical areas. Specifically, the investigation identified breaches concerning the auditors' understanding of the entity, the derecognition of assets, the recoverability of trade debtors, and the assessment of intercompany balances. Additional failures were noted in revenue recognition, journals testing, and the crucial evaluation of LCL's going concern status. These issues collectively pointed to a significant lapse in the audit's quality and diligence.

A central contributing factor to these widespread breaches was the auditors' inadequate grasp of LCL's complex business model and its financial arrangements. LCL, a UK-incorporated private limited company, engaged in the physical trading, supply chain, and logistics management of non-ferrous metals, semi-finished steel, and raw materials for steelmaking. Its operations, part of the GFG Alliance, heavily relied on supply chain finance facilities provided by Greensill Capital (UK) Limited and Wyelands Bank, the latter also being a component of the GFG Alliance. The auditors failed to identify the inherent risks associated with this business model and did not perform sufficient audit procedures regarding the obligations imposed on LCL by these finance agreements. This lack of understanding had profound implications for several audit aspects, including the proper derecognition of assets and the assessment of LCL's ability to continue as a going concern.

As a direct consequence of the FRC's findings, sanctions were imposed, notably affecting Simon Mott-Cowan. During the FRC's investigation and by the end of 2025, Mr. Mott-Cowan voluntarily ceased his audit practice. This means he will no longer serve as a Responsible Individual or undertake any audit work in the future. The FRC underscored the gravity of the situation, stating that the audit "failed in its principal objective to obtain reasonable assurance about whether LCL’s financial statements as a whole were free from material misstatement."

The regulatory body further emphasized that the problems originated from a "pervasive and fundamental lack of professional skepticism" demonstrated by the auditors in the areas under scrutiny. The FRC's press notice, published on October 27, 2026, explicitly clarifies that its findings are directed solely at the statutory audit firm and statutory auditor, and should not be construed as findings against any other individuals or entities not party to these proceedings.

Source: Original reporting via Financial Reporting Council