KPMG fined record 21 million pounds for audits of UK builder Carillion (updated)

Carillion

12/10/2023 07:24

(Adds more detail, KPMG statement in paragraph 6)
    By Huw Jones
       LONDON, Oct 12 (Reuters) - Britain's accounting
regulator on Thursday fined KPMG a record 21 million pounds
($25.86 million) for audits of Carillion, the builder that
imploded in 2018 and prompted a root and branch review of
auditing standards.
    The collapse of Carillion in January 2018, along with the
collapse of retailer BHS two years earlier, led to three
government-backed reviews of auditing markets and standards.
    "The number, range, and seriousness of the deficiencies in
the audits of Carillion during the period leading up to its
failure was exceptional and undermined that credibility and the
public trust in audit," said Elizabeth Barrett, executive
counsel for the Financial Reporting Council.
    "This is reflected in the financial sanction imposed on KPMG
LLP, the highest ever imposed by the FRC."
    The total fine, in two parts covering two sets of
investigations in the audits of Carillion, would have been 30
million pounds but was discounted due to admissions and
co-operation by the auditor.
    Jon Holt, chief executive and senior partner of KPMG in the
UK, said the FRC findings were damning, and the auditor has
cooperated fully with the investigation and accepts its
conclusions and the sanctions.
    "I am very sorry that these failings happened in our firm,"
Holt said.
    "It is clear to me that our audit work on Carillion was very
bad, over an extended period... Since this audit work was
undertaken, we have done an enormous amount to improve controls
and oversight across our firm, to ensure that these failings
could not take place today," Holt said.
    A parliamentary report in 2018 said the collapse of
Carillion exposed the "toothlessness" of the FRC. One of the
three reviews into auditing recommended replacing the FRC with a
more powerful watchdog, though legislation has yet to be tabled
to do this.




($1 = 0.8120 pounds)

 (Reporting by Huw Jones; Editing by Sharon Singleton)
 ((huw.jones@thomsonreuters.com; +44 207 542 3326; Reuters
Messaging: huw.jones.thomsonreuters.com@reuters.net))