Accounting giant EY has come under scrutiny for allegedly misleading the UK’s accounting watchdog, the Financial Reporting Council (FRC), during its audit of the United Arab Emirates (UAE)-based hospital operator NMC Health, reported Financial Times.
The accusation emerges as the £2bn ($2.7bn) negligence trial against EY draws towards a conclusion.
NMC Health, previously listed on the FTSE 100, encountered a downfall in 2020 when hidden debts amounting to billions of dollars were uncovered.
The company’s administrators from Alvarez & Marsal, who are managing the insolvency process, have charged EY with overlooking critical warning signs and failing to detect substantial undisclosed borrowing by NMC’s principal shareholders in audits conducted from 2012 to 2018.
The trial, which commenced in May 2025, has focused on claims that EY misrepresented its access to vital documents to the FRC.
EY partners allegedly led the regulator believe they could access a complete list of risky transactions within NMC’s accounting system, whereas in reality, they could only view the documents on a device controlled by NMC personnel.
This assertion was discussed in the High Court, with the administrators pointing out that what EY communicated to the FRC was incorrect and misleading.
The court heard that the NMC staff provided EY auditors with various reasons for not being able to supply the full download of journal entries.
A email from one of EY’s lead auditors in 2018 expressed scepticism about NMC’s so-called technical barriers, as mentioned in the administrators’ closing submissions, the news publication said.
The case has triggered a series of legal actions and regulatory inquiries across several jurisdictions, including London, New York, and Abu Dhabi.
The administrators’ claim against EY hinges on the assertion that the firm did not gain full access to NMC’s general ledger and failed to manage communications with NMC’s banks effectively.
Despite receiving £14m ($18m) for its audit services, EY has steadfastly denied any negligence in its work on NMC’s accounts.
The firm is expected to deliver its closing arguments in the trial shortly.
“EY comes under scrutiny for misleading UK FRC” was originally created and published by International Accounting Bulletin, a GlobalData owned brand.
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