The UK accountancy regulator has fined BDO £2 million (€2.3 million) for “pervasive breaches” in its audit of the collapsed construction company NMCN.The Financial Reporting Council (FRC) said on Thursday that mistakes in NMCN’s 2019 audit – the company’s final set of accounts before it filed for administration – were “significant and serious”, and highlighted “numerous and pervasive breaches that were fundamental to BDO’s audit work”. The FRC also fined the audit partner who had signed off on the NMCN audit, Geraint Jones, £75,000. Both fines were discounted for co-operation to £1.3mn and about £50,000 respectively. BDO admitted the breaches.The demise in 2021 of NMCN, formerly North Midland Construction, followed a months-long delay in announcing its financial results for 2020. The group had delivered major building and national infrastructure projects.BDO, the UK’s fifth-largest accounting group, had issued clean audit opinions of the London-listed company in 2018 and 2019 on accounts that were later found to include more than £21mn of material misstatements.NMCN’s 2019 accounts, showing double-digit growth in revenue and profit, were signed off just months before the unexpected exit of the construction company’s chief executive and chief financial officers. The group then began its tailspin, with estimated losses for 2020 ballooning to £43 million.Will new pay transparency rules close the gender pay gap for good? Listen | 28:55BDO faces heightened regulatory scrutiny over its audit work, including that for NMCN. The challenger firm has recently been the most successful of the mid-tier in winning major audits away from the Big Four, but has been lambasted by the regulator for five straight years for audits that fall “significantly short of expectations” and was ranked the worst performer among its peers during the regulator’s 2025 inspection. The watchdog said that despite identifying significant risks that NMCN had materially misstated revenues and profits on long‑term contracts, BDO failed to gather “reasonable assurance” that the financial statements were free from material misstatement. BDO also failed to conduct the audit with professional scepticism, the FRC said, and did not gather enough audit evidence to conclude NMCN’s going concern status. It added that the breaches were not intentional or dishonest.BDO resigned in 2020 after 10 years as auditor of NMCN. Jamie Symington, the FRC’s deputy executive counsel, said BDO had “failed to critically assess evidence, challenge management’s assertions and exercise professional scepticism in important areas including going concern”.BDO said its audit “fell below the standards that we expect” but added that it had made “significant structural changes” to its audit practice in the six years since the NMCN audit.“We remain committed to delivering consistency in the high quality of our audits. The FRC has noted the exceptional level of our co-operation,” it said.BDO is also facing an £80 million lawsuit from the administrators of NMCN, which claims that the auditor drafted two versions of its audit opinion in 2019: one with a material uncertainty over the company’s going concern, the other giving it a clean bill of health. The administrators claim that BDO signed off the clean version after NMCN management sent BDO “significantly more optimistic” cash flow predictions. At the time, BDO declined to comment on an ongoing legal case.The watchdog is separately probing BDO for its audit of Home REIT, a property fund, which is winding down after a short seller accused it of misleading investors.In November, the watchdog fined two former BDO partners and the firm more than £6mn for separate “extremely serious” misconduct. – Copyright The Financial Times Limited 2026