The auditors of Christmas savings club Farepak, which collapsed seven years ago, have been ordered to pay more than £1m in fines and costs.
The company, which was based in Swindon, Wiltshire, went into administration in 2006 leaving 116,000 people with total losses of £37m.
The Financial Reporting Council (FRC) has fined Ernst and Young £750,000 and told them to pay costs of £425,000.
Auditor Alan Flitcroft, who worked for the accountants, was fined £50,000.
Ernst and Young and Mr Flitcroft, who were also formally reprimanded by the FRC, admitted their auditing fell below the expected standard.
Customers had invested money with the scheme as a way of saving for Christmas.
Paul George from the FRC said: "The FRC is pleased with the outcome of this case, which sends a strong clear reminder to all accountants and accountancy firms that they have a responsibility to carry out their professional work with due skill, care and diligence in the audit of subsidiary entities and obtain corroborative evidence to support management representations."