KPMG accused of giving regulator misleading data in Carillion audit
UK’s Financial Reporting Council says KPMG and the individuals provided ‘false and misleading information’ in reviews of Carillion and Regenersis audits
01 September 2021 - 17:08
byKarin Matussek and Ellen Milligan
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The UK’s accounting watchdog filed a disciplinary complaint against KPMG, a former partner and current and former employees of the accounting firm over their role in past audits of two UK companies.
KPMG and the individuals cited provided “false and misleading information” and documents to the Financial Reporting Council (FRC) when it was reviewing two earlier KPMG audits, the regulator said in a statement. One was a 2016 audit of now defunct contractor Carillion and the second a 2014 audit of Regenersis, the regulator said.
KPMG said it alerted the regulator when it discovered the issues in 2018 and 2019 and suspended the people involved.
“The allegations in the formal complaint would, if proven, represent very serious breaches of our processes and values,” the accounting firm said. “We have co-operated fully with our regulator throughout their investigation.”
The individuals implicated in Wednesday’s announcement include the engagement partners for the Carillion and Regenersis audits. The complaint, however, doesn’t allege misconduct arising from the audits being badly done or the financial statements not being properly prepared, the FRC said. The 2016 audit of Carillion’s financial statements is being probed in separate investigations.
KPMG is under increasing pressure in the UK where the Big Four firm just last month was fined £13m and was severely reprimanded for its advisory work on the sale of Silentnight Holdings to US private equity firm HIG Capital.
Carillion fell into liquidation in 2018 after the UK government refused to bail it out, costing almost 3,000 jobs and leaving 30,000 suppliers and subcontractors with £2bn in unpaid bills. It was one of the biggest corporate casualties in British history.
In 2020, Carillion’s administrators told a London court it was preparing to lodge a £250m negligence lawsuit against KPMG over its auditing of the defunct contractor’s accounts. The administrators lost a bid to get key documents to prepare for the suit at a hearing last year.
A disciplinary tribunal has been scheduled to review the case, the FRC said. This hearing is scheduled to start on January 10.
Bloomberg News. More stories like this are available on bloomberg.com
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
KPMG accused of giving regulator misleading data in Carillion audit
UK’s Financial Reporting Council says KPMG and the individuals provided ‘false and misleading information’ in reviews of Carillion and Regenersis audits
The UK’s accounting watchdog filed a disciplinary complaint against KPMG, a former partner and current and former employees of the accounting firm over their role in past audits of two UK companies.
KPMG and the individuals cited provided “false and misleading information” and documents to the Financial Reporting Council (FRC) when it was reviewing two earlier KPMG audits, the regulator said in a statement. One was a 2016 audit of now defunct contractor Carillion and the second a 2014 audit of Regenersis, the regulator said.
KPMG said it alerted the regulator when it discovered the issues in 2018 and 2019 and suspended the people involved.
“The allegations in the formal complaint would, if proven, represent very serious breaches of our processes and values,” the accounting firm said. “We have co-operated fully with our regulator throughout their investigation.”
The individuals implicated in Wednesday’s announcement include the engagement partners for the Carillion and Regenersis audits. The complaint, however, doesn’t allege misconduct arising from the audits being badly done or the financial statements not being properly prepared, the FRC said. The 2016 audit of Carillion’s financial statements is being probed in separate investigations.
KPMG is under increasing pressure in the UK where the Big Four firm just last month was fined £13m and was severely reprimanded for its advisory work on the sale of Silentnight Holdings to US private equity firm HIG Capital.
Carillion fell into liquidation in 2018 after the UK government refused to bail it out, costing almost 3,000 jobs and leaving 30,000 suppliers and subcontractors with £2bn in unpaid bills. It was one of the biggest corporate casualties in British history.
In 2020, Carillion’s administrators told a London court it was preparing to lodge a £250m negligence lawsuit against KPMG over its auditing of the defunct contractor’s accounts. The administrators lost a bid to get key documents to prepare for the suit at a hearing last year.
A disciplinary tribunal has been scheduled to review the case, the FRC said. This hearing is scheduled to start on January 10.
Bloomberg News. More stories like this are available on bloomberg.com
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