Accountancy firm Grant Thornton (GT) has been reprimanded by the Financial Reporting Council (FRC) over an audit for a company called AssetCo.
GT will also have to be a fine of £2.3m over the issue.
The FRC said GT, and its partner Robert Napper, had admitted a “lack of professional competence and due care”.
Mr Napper was issued a fine of £130,000 and banned from auditing for three years, while GT racked up £200,000 in additional costs.
The FRC say that the management of AssetCo had deceived the auditors but, by failing to employ the required level of “professional scepticism”, the accountancy firm were, at least partially, at fault.
Gareth Rees QC, executive counsel to the FRC, said: “The respondents have admitted widespread and significant failings in their audit work, and GT specifically has accepted there were serious failings in the execution of certain aspects of the firm’s quality control procedures.”
“This misconduct is rightly reflected in the seriousness of the sanctions, such as the exclusion of Mr Napper from membership of the ICAEW (Institute of Chartered Accountants of England and Wales) and the fines on both respondents.
It is believed that the errors in the auditing were neither intentional nor malicious, but were so poor that they “fell significantly short of the standards reasonable expected of them”, and showed a “widespread lack of professional competence and due care in the performance of the audits.”
A GT spokeswoman said the firm regretted its failings.
“Our audit quality processes have evolved significantly since these audits were performed in 2009 and 2010 and we are determined in our efforts to ensure our work is of the highest quality.
“Given the FRC’s ongoing proceedings against three former executives of AssetCo, in which the FRC alleges, amongst other things, that they acted dishonestly or recklessly, we are unable to comment further,” she added.