KPMG faces potential misconduct fine over Carillion audit
06/05/2022 11:11
By Huw Jones
LONDON, May 6 (Reuters) - KPMG faces a potential fine next
week after admitting it misled regulators during spot checks on
its audits of construction firm Carillion and software company
Regenersis, in a case the "Big Four" auditor described as
disturbing.
The case arose after KPMG self-reported findings from an
internal investigation to the Financial Reporting Council (FRC),
which regulates auditing in Britain. The FRC said on Friday that
a hearing on its complaint against KPMG and former employees
will resume before a disciplinary tribunal on May 12 and 13.
KPMG admitted at an initial hearing in January to
misconduct, which its UK chief executive Jon Holt said was
disturbing and upsetting. urn:newsml:reuters.com:*:nL8N2TQ517
The case is separate from the FRC's investigation into
KPMG's audit of Carillion, whose collapse led to recommendations
of a sector shake-up, although legislation has yet to be brought
before parliament on the proposed reforms. urn:newsml:reuters.com:*:nL5N2WX3YP
Five former employees of KPMG involved in the two audits
contested misconduct allegations made by the FRC at the January
hearing. A sixth former employee settled just before it began.
FRC counsel Mark Ellison told the January hearing that the
former KPMG employees "forged" and "manufactured" missing
documents after questions from the FRC during spot checks.
The five former employees will hear next week if the
allegations against them have been upheld by the tribunal and,
if so, what sanctions the FRC is seeking. Sanctions need the
tribunal's endorsement. urn:newsml:reuters.com:*:nL8N2TQ517
KPMG had no further comment on Friday.
(Reporting by Huw Jones; Editing by Alexander Smith)
((huw.jones@thomsonreuters.com; +44 207 542 3326; Reuters
Messaging: huw.jones.thomsonreuters.com@reuters.net))