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The UK accountancy regulator has launched an investigation into Deloitte and Azets over their audits of Stenn, a fintech that collapsed into administration in December after its lenders began probing potentially suspicious transactions.
The Financial Reporting Council will examine audits of the invoice-financing company performed by Big Four auditor Deloitte and Azets, a top 10 UK accounting firm, between 2017 and 2023.
Deloitte took over as Stenn’s auditor from Azets, which is backed by private equity firm Hg, for the 2023 financial year.
Azets had taken on the work after Stenn’s previous auditor, EY, resigned in 2018 citing “concerns regarding certain related party transactions” and the “sufficiency of explanations” given by management, according to a publicly filed letter.
The FRC said its probe related to audits of two entities: Stenn Assets UK Limited and Stenn International Limited. The watchdog has powers to impose penalties, including fines, against auditors that fail to meet regulatory standards.
Banks’ concerns over Stenn began when US authorities unsealed criminal indictments in a money laundering case that included passing references to the company and its Russian founder and chief executive Greg Karpovsky.
In one of the indictments US authorities alleged that Stenn Assets UK, one of the companies placed into administration, had received $1.7mn from a company linked to a Russian citizen who had pleaded guilty to running an unlicensed money transmitting business.
Stenn had once boasted a $900mn valuation and partnerships with international banks such as Citigroup and Barclays, despite Karpovsky having previously been involved in a Russian invoice finance company that collapsed amid fraud allegations.
Karpovsky told the Financial Times in December that any wrongdoing was “proved to have taken place long after my departure from the company”.
The FRC has three open investigations into audits performed by Deloitte, including for its work on transport group Go-Ahead, upmarket clothing retailer Joules and car dealership Lookers.
Deloitte said: “We will co-operate fully with the Financial Reporting Council’s investigation. We remain committed to the highest standards of audit quality.”
Azets said: “We responded promptly to the FRC’s request for information and are co-operating fully with its formal investigation.”
