KPMG escapes record penalty over Carillion, Regenersis trials

0

A banner for professional services network KPMG hangs above the Collision conference in Toronto, Ontario, Canada June 23, 2022. Picture taken June 23, 2022. REUTERS/Chris Helgren

Sign up now for FREE unlimited access to Reuters.com

to register

July 25 (Reuters) – KPMG was fined £14.4million ($17.27million) on Monday after the accounting firm admitted to using its regulator on spot checks on audits of construction firm Carillion and outsourcing to have given false and misleading information to Regenersis.

The Financial Reporting Council, the regulator involved, also directed KPMG to appoint an independent reviewer of the company’s current Audit Quality Review (AQR) policies and procedures.

KPMG would have been fined £20million had it not received a rebate for self-reporting the incidents, cooperating with the FRC and admitting wrongdoing, the FRC said.

Sign up now for FREE unlimited access to Reuters.com

to register

Were it not for the rebate, the fine would have been the highest FRC fine ever, dwarfing Deloitte’s £15m penalty in September 2020 for an audit of software company Autonomy.

KPMG, one of the world’s ‘Big Four’ accounting firms, also paid £3.95m for the costs of the FRC and the Tribunal.

Five KPMG employees had challenged the FRC’s allegations of misconduct related to the audits, but an independent court ruled against them. A sixth clerk checked in hours before court hearings began in January.

The FRC had told the hearing that the former KPMG employees had “forged” and “manufactured” missing documents requested by the regulator.

“The seriousness of the wrongdoing which we have found to be proven hardly needs explanation,” the court said.

KPMG faced the same allegations as its employees because it is liable for their conduct.

Four of the five staff who attended the tribunal’s hearing were fined between £30,000 and £250,000 and given a disqualification from the profession of between seven and 10 years. The fifth person was severely reprimanded but escaped a fine.

“I fully accept the findings and sanctions of the tribunal,” said KPMG’s UK chief executive Jon Holt.

KPMG said it has worked hard and with full transparency to the FRC since the incidents to make sure the behavior of the individuals involved did not reflect the company’s broader culture, Holt said.

The FRC is still investigating KPMG’s audit of Carillion, the collapse of which led to reviews of how to improve auditing standards.

($1 = 0.8356 pounds)

Sign up now for FREE unlimited access to Reuters.com

to register

Additional Reporting by Yadarisa Shabong in Bengaluru; Adaptation of Uttaresh.V and Louise Heavens

Our standards: The Thomson Reuters Trust Principles.

Share.

About Author

Comments are closed.