The Financial Reporting Council has fined EY more than £2.2m for failing to properly challenge Stagecoach bosses when auditing their accounts for 2017.
The regulator said: “While it is not alleged that the financial statements were in fact misstated, in several material instances, the respondents failed to obtain sufficient appropriate audit evidence.”
A spokeswoman for EY said on Wednesday that “regrettably” the audit firm “fell short of the standards we set for ourselves, and the standards expected of us by the FRC and society”.
She said: “We have cooperated with the FRC throughout their investigation, take their findings very seriously and have worked hard to rectify the issues identified.
“We remain committed to working with the FRC and other stakeholders to enhance standards across the audit profession, and to ensure the UK’s corporate governance and audit framework remains world leading.”