KPMG escapes record fine over Carillion, Regenersis audit checks (updated)
25/07/2022 09:36
(Adds more detail, KPMG statement)
By Huw Jones
July 25 (Reuters) - KPMG was fined 14.4 million pounds
($17.27 million) on Monday after the accounting firm admitted to
providing false and misleading information to its regulator
during spot checks on audits of construction firm Carillion and
outsourcing firm Regenersis.
The Financial Reporting Council, the regulator involved,
also ordered KPMG to appoint an independent reviewer into the
firm's current Audit Quality Review (AQR) policies and
procedures.
KPMG would have been fined 20 million pounds had it not
earned a discount for self-reporting the incidents, co-operating
with the FRC and admitting to the misconduct, the FRC said.
Without the discount, the fine would have been the largest
FRC fine ever, eclipsing Deloitte's 15 million pound penalty in
September 2020 for an audit of software company Autonomy.
KPMG, one of the world's "Big Four" auditing firms, also
paid 3.95 million pounds towards the costs of the FRC and
Tribunal.
Five KPMG employees had challenged FRC allegations of
misconduct relating to the audits, but an independent Tribunal
found against them. A sixth employee settled hours before
Tribunal hearings began in January. urn:newsml:reuters.com:*:nL8N2TQ517 urn:newsml:reuters.com:*:nL2N2X422D
The FRC had told the hearing that the former KPMG employees
had "forged" and "manufactured" missing documents which had been
requested by the regulator.
"The seriousness of the misconduct that we have found proved
scarcely needs explanation," the Tribunal said.
KPMG faced the same allegations as its employees because it
is liable for their conduct.
Four of the five staff who took part in the Tribunal hearing
were fined between 30,000 and 250,000 pounds, and banned from
the profession for between seven and 10 years. The fifth person
was severely reprimanded but escaped a fine.
"I accept the findings and sanctions of the tribunal in
full," said KPMG's chief executive in the UK, Jon Holt.
Since the incidents, KPMG said it has worked hard and with
complete transparency to the FRC, to assure itself that the
behaviour of the individuals concerned does not reflect the
wider culture of the firm, Holt said.
The FRC is still investigating KPMG's audit of Carillion,
whose collapse sparked reviews on how to improve auditing
standards.
($1 = 0.8356 pounds)
(Additional reporting by Yadarisa Shabong in Bengaluru; editing
by Uttaresh.V and Louise Heavens)
((Yadarisa.Shabong@thomsonreuters.com; Twitter: https://twitter.com/Yadarisa;
+919742735150;))