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One of the UK’s “big four” accountancy firms has been fined a record £15m for its audit of the software company Autonomy ahead of its £7bn sale to Hewlett-Packard.
The Financial Reporting Council (FRC), which brought the case, said a tribunal found the firm’s audits in 2009 and 2010 fell “significantly” short of expected standards for auditors.

It is the latest legal fallout to arise over the deal, completed in 2011, that saw the US tech brand buy Autonomy from its founder, entrepreneur Mike Lynch.

Image: Mike Lynch was the founder and chief executive of Autonomy
The US tech giant subsequently wrote down the company’s value by three-quarters and took Mr Lynch to court, claiming Autonomy’s finances were falsified.
He has denied any wrongdoing and counter-sued.

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The £15m fine is the heaviest penalty to be issued by the FRC – beating the £10m sum handed to Deloitte rival PwC for its work on the accounts of BHS ahead of its collapse.

The FRC said that in addition to the fine, the tribunal ordered Deloitte to foot the £5.6m bill covering the cost of the investigation and subsequent hearings.

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Two former Deloitte partners, Richard Knights and Nigel Mercer, were also given fines of £500,000 and £250,000 respectively for their roles in the audits.
The FRC said “integrity, objectivity and independence” had been lost and said the pair had “failed to exercise adequate professional scepticism and to obtain sufficient appropriate audit evidence.
“Deloitte should not have issued unqualified audit opinions in these years based on the audit evidence obtained.
“Deloitte, Mr Knights and Mr Mercer fell seriously short of the standards to be expected of a reasonable auditor.”
A spokesperson for the company responded: “We regret that the FRC tribunal has ruled that aspects of our audit work on Autonomy between 2009 and 2011 fell below professional standards required.
“Our audit practices and processes have evolved significantly since this work was performed over a decade ago and we continue to transform our audit by investing in firm-wide controls, technology and processes.
“We remain committed to playing our role in delivering change that embraces audit quality, improves choice and restores trust in the profession.”
Mr Knights and Mr Mercer issued a statement, saying: “We are disappointed that the tribunal has criticised our conduct and certain judgements we made in 2009 to 2011.
“At all times we believe we acted professionally, diligently and in good faith and we disagree with the findings. We are grateful for the full and unwavering support of Deloitte in this matter.”

The owner of Young’s Seafood is charting a course towards the London stock market that will provide a fresh test of the appetite among City institutions for private equity-controlled assets.
Sky News has learnt that Eight Fifty Food Group, which owns Young’s and the giant pork processing business Karro, is in talks with investment bankers about starting preparations for an initial public offering (IPO).

If it goes ahead, a float is expected to take place next year at the earliest, although people close to the situation cautioned that there was no definitive timetable for a process.

Image: Eight Fifty comprises two food brands Young’s and Karro
Eight Fifty, which takes its name from the fact that there are roughly 850 acres in a nautical square mile, denoting “the unity of land and sea”, is owned by the private equity firm CapVest.
The group has annual sales of approximately £1.4bn, and employs more than 7,500 people across 19 sites in the UK and Ireland.

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It was unclear on Thursday whether CapVest might also seek to gauge the interest of potential buyers of the company, alongside the preparations for a stock market listing.

The buyout firm owns a number of other food assets, including brands such as Rowse honey, which is part of CapVest’s Valeo business.

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An Eight Fifty Food Group spokesperson declined to comment specifically on the subject of a potential IPO, saying: “As a major food group made up of Karro Food Limited and Young’s Seafood we continue to focus on providing great food to customers across pork and seafood.
“We are excited about the ongoing opportunity to create an ambitious multi-protein food business of considerable scale with a combined platform in two important protein categories that are experiencing consistent long-term growth.”
CapVest declined to comment.

Britain’s economy is “less weak” than previously expected but a recent rise in COVID-19 cases could take its toll on activity, the Bank of England has said.
It now sees GDP being 7% smaller in the current quarter than it was prior to the pandemic – not as bad as it had previously feared.

But policymakers also turned their attention to the uptick in coronavirus case numbers, as figures this week showed daily numbers had reached their highest level since May.

August: COVID-19 ‘dwarfs’ impact of no-deal Brexit

The BoE said: “The recent increases in COVID-19 cases in some parts of the world, including the United Kingdom, have the potential to weigh further on economic activity, albeit probably on a lesser scale than seen earlier in the year.”
It also pointed out that its forecast for economic recovery was based on the assumption of an “immediate, orderly move to a comprehensive free trade agreement with the European Union” – at a time when progress appears to be fraught.

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“The outlook for the economy remains unusually uncertain,” it said.

It came as the UK recorded another 3,395 cases on Thursday and 21 more deaths.

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The bank’s rate-setting monetary policy committee (MPC) made the comments as it announced interest rates were being kept on hold at 0.1%, while its separate bond purchase stimulus scheme will remain at £745bn.
But it also revealed that the MPC had been briefed on “plans to explore how a negative bank rate could be implemented effectively” if needed.
That is an idea that Governor Andrew Bailey has previously said is now part of the bank’s “toolbox” of possible measures.

Chancellor: ‘Hard times are here’

Britain sank into its deepest recession on record earlier this year as the coronavirus lockdown crushed the economy – and the latest GDP figures show that, while it has started to rebound, it remained 11.7% off its pre-pandemic level in July.
The Bank of England says its analysis of payment data suggests consumer spending “continued to recover during the summer and is now at around its start-of-year level”.

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That meant that, though businesses were still uncertain about prospects, the bank expects GDP to recover to 7% below its pre-pandemic level in the current third quarter which is “less weak than had been expected” in its August monetary policy report.
But it cautioned that, while economic indicators were a “little stronger” than had been foreseen last month, it was unclear how much impact this would have in the longer term.

Former cabinet minister Chris Grayling – who once gave a multimillion-pound contract to a ferry firm with no ships – has landed a new £275 per hour role with a major ports company.
According to updated parliamentary records, the Conservative MP will earn £100,000 per year as a “strategic adviser” to Hutchison Ports Europe.

A new entry in the register of MPs’ interests states that Mr Grayling expects to do about seven hours of work per week in the role.

Image: Hutchison owns Felixstowe port in the UK
The former transport secretary, who was involved in no-deal Brexit planning for the UK’s ports during his time as a government minister, consulted a Whitehall watchdog about taking on the position.
The Advisory Committee on Business Appointments, chaired by Mr Grayling’s former cabinet colleague Lord Pickles, considers the appropriateness of new jobs taken on by former ministers.

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The committee ruled that Mr Grayling should not give any advice to Hutchison on matters relating to his Brexit planning work while transport secretary for a period of two years since he left office.

They also said – for the same two-year period – he should not work on Hutchison contracts that might relate directly to government work, and not become personally involved in lobbying ministers on behalf of the firm.

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Hutchison describes itself as the “world’s leading port network” with more than 30,000 employees, operating ports and terminals in 27 countries.
Its European arm operates in Belgium, Germany, Poland, Spain, Sweden, the Netherlands and the UK – where it owns ports at Harwich, Felixstowe and Rochester.
While transport secretary, Mr Grayling awarded Seaborne Freight a £13.8m contract to ensure ferries kept crossing the Channel in the event that the UK leaves the EU without an exit agreement.
The government was heavily criticised after it emerged the firm had no vessels suitable for carrying goods or vehicles, and had copied its terms and conditions of business from the website of a takeaway.
The contract was later ripped up.

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Mr Grayling was sacked as a cabinet minister by Mr Johnson when he became prime minister last July.
During his previous nine years as a government minister, including spells in three different cabinet roles, Mr Grayling became known by critics as “failing Grayling” due to a number of controversies at his various departments.
Last month, Mr Grayling resigned as a member of the House of Commons Intelligence and Security Committee – six weeks after he was defeated in his attempt to become its chair.
Mr Grayling’s register of interests also notes that he employs his wife Sue as his parliamentary office manager.
In 2017, newly elected MPs were told they would no longer be allowed to employ spouses and other relatives using taxpayers’ money.
The restriction didn’t apply to those who already employed “connected parties”.
Mr Grayling has been MP for Epsom and Ewell since 2001.

The number of people working from home is expected to double following the coronavirus pandemic, new research suggests.
A survey carried out by the Chartered Institute of Personnel and Development (CIPD) found that employers reckon 37% of staff will regularly avoid the journey into the office following COVID-19 – up from 18% before the pandemic.

And the number of people expected to make their home offices a permanent fixture stands at 22% – up from 9% pre-lockdown.
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Image: The benefits of home working includes a better balance between the professional and personal sides of life, as well as a boost in collaboration
More than a quarter of the 1,000 respondents to the study reported an increase in productivity from the pivot to domestic workplaces.

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Other benefits of home working included an improved work-life balance and better collaboration between staff.

However it is not all plain sailing, with the research listing a drop in mental well-being, complications in line management, and trouble monitoring performance as the downsides of employees not commuting into the office.

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And the number of people reporting an increase in productivity was matched by an equal percentage saying they get less done at home.

Image: There are downsides to ditching the commute – with a quarter of people saying they get less done at home
The CIPD’s Chief executive Peter Cheese said: “The step-change shift to home working to adapt to lockdowns has taught us all a lot about how we can be flexible in ways of working in the future.
“Employers have learnt that, if supported and managed properly, home working can be as productive and innovative as office working and we can give more opportunity for people to benefit from better work-life balance.
“But it doesn’t suit everyone and increasingly organisations will have to design working arrangements around people’s choice and personal preference over where and when they would like to work, whilst also meeting the needs of the business.”

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Mr Cheese added: “Employers will also have to redouble efforts to introduce flexible working arrangements for staff unable to work from home otherwise they will increasingly have a two-tier workforce of those who have opportunity to benefit from home working and flexibility and those who don’t.
“It is often essential workers and lower paid front-line staff who are not able to work from home and it is crucial these workers are not left behind when we think about flexible working.”

John Lewis Partnership has confirmed it will not pay a staff bonus next year after it posted a half-year loss of £635m.
It is the first time in more than 60 years that workers at the employee-owned business will not receive a pay-out, which was last axed after in 1948 in the aftermath of the Second World War and remained at zero until 1953.

The partnership has like other retailers been battered by the pandemic – axing more than a thousand jobs as it closes some stores for good.
Its John Lewis department store chain suffered a 10% fall in sales for the six months to July – in contrast to the partnership’s supermarket business Waitrose, where sales rose by nearly 10%.
Dame Sharon White, chair of JLP, said its worst-case scenario remained a 5% fall in sales at Waitrose and 35% at John Lewis for the full year with the most likely outcome a “small loss or a small profit”.

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Partners had already been warned in April that they were unlikely to see a bonus in 2021 and Dame Sharon said the board had now confirmed “that there will not be a bonus next year given our profit outlook”.

She added: “I know this will come as a blow to partners who have worked so hard this year.

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“The decision in no way detracts from the commitment and dedication that you have shown.
“The partnership found itself in a similar position in 1948 when the bonus was halted following the Second World War.
“We came through then to be even stronger than before and we will do so again.”
Dame Sharon said that “outside of exceptional circumstances” JLP would expect to start paying a bonus again once profits exceed £150m and debt falls and that once profits top £300m it would expect the bonus to be at least 10% of salary.
JLP has been trimming its once-generous staff bonuses – which stood at 17% in 2013 – in recent years, with a cut this year to 2%.
But until now it has avoided axing the pay-out completely.

Fashion retailer Next has warned of the impact the “rule of six” could have on festive sales as it reported a half-year loss.
The group saw full-price sales slump by 33% in the six months to 25 July though a pick-up in recent weeks, spurred by cooler weather and staycations, saw it upgrade its outlook for the rest of the financial year.

However, it warned of further pressure on demand thanks to factors such as newly-tightened social distancing rules.
Next said the recently implemented “rule of six”, if still in force in December “is likely to depress demand for gifts and clothing associated with traditional Christmas family get togethers”.
The group said it made a half-year loss of £16.5m, down from £327m a year ago, as sales were crushed by the pandemic but it said that in the last seven weeks they rose 4%.

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The group is now forecasting annual earnings of £300m, down from £729m a year before but more optimistic than the £195m previously pencilled in.

Lord Wolfson, Next’s chief executive, said: “The company’s sales performance through the pandemic has been more resilient than we expected.

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“The scale of our online business (in the UK and overseas), the breadth of our product offer, and the fact that much of our store portfolio is located out of town, have served to mitigate the worst effects of the pandemic on trade.”
Next’s physical stores were worst affected by the lockdown in the first half, with sales falling 61%, while online demand jumped by 14%.
In the 13 weeks since stores reopened, full-price sales had been “much better than we anticipated”, the group added, down 2% on last year.
“Unfortunately, we believe that recent sales are very unlikely to be indicative of our sales performance for the rest of the year.”
Next said it believed sales in August and September had been boosted by fewer people taking overseas holidays in August and cool weather at the end of the month – compared to a heat wave last year – which lifted demand for warmer autumn ranges.
The group forecasts that for the full year, sales will be down by 12% overall – cautioning that the end of the furlough scheme, the onset of winter potentially worsening the pandemic, and tightened social distancing rules will keep demand under pressure.

Sony has come out swinging ahead of the console wars looming this holiday season by confirming its two PS5 consoles will be available in November alongside a host of exciting games.
The flagship PlayStation 5 will be available for £449 in the UK from 19 November, and a digital edition which doesn’t have a disc drive will cost £359.

Sony delivered the prices and release dates during a showcase on Wednesday which included surprise new games, including Final Fantasy XVI and an open-world RPG set in the Harry Potter universe.

Image: Sony confirmed the PS5 would be available on 19 November in the UK
Hogwarts Legacy is a role-playing game set in the late 1800s and appears as if it will allow players to choose their Hogwarts house as well as explore the world beyond the magical school.
Players will have access to spells, potions and magical creatures, and although the underlying story wasn’t revealed the narration suggested it would be shaped by the choices the player makes in-game.

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Final Fantasy XVI seems to be set in a medieval-style world with knights riding the series’ classic Chocobo steeds and characters summoning icon monsters to battle in real-time. Both games will be released in 2021.

Sony’s flagship console will cost exactly as much as Microsoft’s, although the more affordable Xbox Series S is £100 cheaper than the PS5 digital edition. That is due to the digital edition having the same specifications as the version with a disc drive.

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The consoles are going to hit shelves first in the US, Japan, Mexico, Australia, New Zealand and South Korea on 12 November before coming out the following week in the rest of the world.
Pre-orders will open on 17 September at select retailers, giving Sony a bit of a head start on Microsoft with Xbox pre-orders opening on 22 September.

Image: Sony showcased a number of exciting games for the PS5
Sony put a lot of games into what was planned as a 40-minute showcase, including those above as well as a sequel to God of War, Spider-Man: Miles Morales and a new Call of Duty game.
Sky News had previously completed a full roundup of all 26 games revealed for the PS5 in March, starting with the six we’re most excited for, followed by the rest in alphabetical order.
Response to the event was very positive on social media, with the hashtag #PlayStation5 trending globally on Twitter as people talked about their favourite games.
Sony also announced the PlayStation Plus Collection, which will give players access to classic PS4 games including The Last of Us and Fallout 4 from launch.

The US central bank has signalled interest rates will remain near-zero through 2023 despite improved forecasts on the severity of the hit to the economy from the coronavirus crisis.
The Federal Reserve kept its benchmark rate at between 0%-0.25% following its latest policy meeting – a move that was widely expected as the country emerges from the worst of the COVID-19 shock.

A majority on the rate-setting committee, which includes chair Jay Powell, said it expected the rate would remain at that crisis level for at least three years.

Image: Federal Reserve chairman Jay Powell told reporters that the economic hit remained uncertain
That was because its latest economic forecasts did not foresee inflation hitting its target rate until 2023.
The Fed, which has previously announced a policy shift to tackle years of weak inflation, said on Wednesday it did not foresee interest rates moving upwards until inflation was on track to “moderately exceed” its 2% target “for some time.”

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It also outlined how it expected the US economic recovery from recession to accelerate, with unemployment falling faster than the central bank expected in June.

The committee cut, by significant margins, its median forecasts for both the unemployment rate and economic growth in 2020.

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They saw gross domestic product (GDP) falling by 3.7% this year, an improvement on the 6.5% hit projected in June.
The jobless rate was predicted to be at 7.6% by the year’s end. It had earlier warned of a 9.3% figure.
At a virtual news conference following the statement, Mr Powell said the economic outlook still remained highly uncertain and it depended heavily on the ability of the US to get control of the pandemic.

Where jobs have been lost in UK economy
Where jobs have been lost in UK economy

“A full economic recovery is unlikely until people are confident that it is safe to re-engage in a wide variety of activities,” he warned.
Like in most countries that imposed widespread lockdowns in a bid to tackle the spread of coronavirus, the US has seen a speedy recovery in output and employment though it has been tested by continuing and new restrictions in several populous states.
Talks aimed at securing further stimulus from the Federal government have been held up by bitter divisions among Democrats and Republicans in advance of November’s presidential election.
A strong economy is a pillar of Donald Trump’s re-election campaign.
The latest economic data released on Wednesday suggested that the end of a $600-per-week unemployment payment for Americans left out of work, hit consumption last month.

Britain’s best-known film studio is to deliver a boost to the country’s embattled movie and tourism industries by unveiling expansion plans that will include a blockbuster visitor attraction.
Sky News has learnt that Pinewood Group, which has played host to many instalments of the James Bond and Star Wars franchises, will announce proposals on Thursday for a development – called Screen Hub UK – on a 77-acre site to the south of the existing studio complex.

The scheme, which will involve a total investment of about £450m, is expected to create up to 3,500 jobs, according to sources who have been briefed on the plans.

Image: Pinewood Studios is located at Iver Heath in Buckinghamshire
It will include a 350,000 square foot visitor attraction that is likely to feature many of the most famous films made at the site during its 84-year history.
Among those at least partly shot at Pinewood during the last year have been Rocketman, Mary Poppins Returns, 1917, Star Wars: The Rise of Skywalker and the 25th James Bond film, No Time To Die, which is due to be Daniel Craig’s final outing as 007.

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The latest instalment of the Jurassic World series is currently filming at the Buckinghamshire studio.

Insiders said the new attraction, the first to be opened at Pinewood, would not be a theme park, but a “film-themed visitor experience”.

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Screen Hub UK will also include 350,000 square feet of new film production facilities, an educational training and skills hub, a creative industries business growth area, and a green campus, the sources added.
The plans will deliver a huge shot in the arm to a film industry which, like many others, has been disrupted by the coronavirus pandemic.

Image: Emily Blunt starred in Mary Poppins Returns that was produced at Pinewood
Filming across the television and movie sectors has been postponed or cancelled during the last six months, resulting in substantial delays to film releases and in turn dealing a heavy blow to the finances of cinema chains around the world.
Other big investments in UK film production capacity include a state-of-the-art film and TV studio being developed by Sky, the immediate owner of Sky News, at Elstree.

Image: Sky Studios Elstree is being built with the backing of Sky’s owner, Comcast in partnership with NBCUniversal
That project, which is being financed by the FTSE 100 asset management and pensions giant Legal & General, was given the green light by Hertsmere Borough Council in July, and is due to open in 2022.
Sources said that consultations with the local community and other stakeholders about Pinewood’s latest expansion proposals are expected to get under way next week.
They will be the latest in a string of ambitious expansion projects announced since the company was acquired by the real estate-focused private equity investor Aermont Capital for £323m four years ago.
Previously, the company had been listed on the London Stock Exchange for more than a decade.
Last year, Pinewood announced a deal to give Netflix, the US-based streaming service, a permanent home at the group’s Shepperton studios.
The company has also unveiled plans for a 1 million square foot expansion of Pinewood and Shepperton that is expected to create 10,000 jobs and provide a total of 29 new sound stages for production – just over two-thirds of which will be at Shepperton.
In total, those plans are expected to require investment of £1bn.
It was unclear on Wednesday how Pinewood planned to fund the Screen Hub UK development, but Aermont is unlikely to be short of financing options given the company’s continuing profitability and occupancy deals with Netflix and Disney.

Image: When Harry met Chewbacca. The prince met the Star Wars veteran during a visit to Pinewood in 2016
The company said earlier this year that the latter two agreements had provided “provide both visibility and security of revenues in the medium to long-term”.
In response to an enquiry from Sky News, Paul Golding, the Pinewood Group chairman and Aermont partner, said: “The government and Buckinghamshire Local Enterprise Partnership have recognised Pinewood Studios as a major economic asset to be enhanced with the creation of a screen growth hub for the UK.
“We have been looking at a visitor experience for some time and feel that now is the right moment to bring it forward.
“The project will strengthen UK film and bring much needed jobs and spending.
“We hope our planning application will receive widespread support.”