×

We've got news for you.

Register on BusinessLIVE at no cost to receive newsletters, read exclusive articles & more.
Register now
A worker operates a crane on a Carillion construction site in Smethwick, Britain, January 29 2018. Picture: DARREN STAPLES/REUTERS
A worker operates a crane on a Carillion construction site in Smethwick, Britain, January 29 2018. Picture: DARREN STAPLES/REUTERS

London  — KPMG faces a £14.4m fine after admitting it misled regulators during spot checks on audits of construction group Carillion and software firm Regenersis.

The Financial Reporting Council (FRC), the British auditing regulator, told a London tribunal on Thursday that it was seeking a record £20m fine, reduced to £14.4m because KPMG self-reported and co-operated.

“It was unjustifiable and wrong,” KPMG CEO Jon Holt said in a statement, adding: “It was a violation of our processes and a betrayal of our values.”

KPMG, one of the Big Four auditors that dominate the market alongside EY, Deloitte and PwC, admitted to misconduct at an initial London tribunal in January and reiterated its apology at the start of a two-day hearing.

“I am saddened that a small number of former employees acted in such an inappropriate way, and it is right that they — and KPMG — now face serious regulatory sanctions,” Holt said.

The tribunal found five former KPMG employees guilty of misconduct during a routine FRC inspection of a Regenersis audit to end-June 2014 and a Carillion audit to end-December 2016.

The FRC, which is seeking to fine them between £50,000 and £400,000 and ban them from the profession for up to 15 years, alleged they provided false or misleading information or documents to the regulator. The five had contested the allegations.

The tribunal will rule on sanctions at a later date.

Because KPMG is liable for the conduct of its employees, it faced the same allegations.

The proceedings did not delve into the underlying audit work. The FRC is separately investigating KPMG’s audits of Carillion, whose collapse in 2018 led to recommendations of a sector shake-up, though legislation has yet to be brought before parliament.

KPMG has separately vowed to defend itself against a £1.3bn lawsuit by Carillion’s liquidators for missing “red flags”, in one of the largest claims against top accountants to date.

Reuters 

subscribe

Would you like to comment on this article or view other readers' comments?
Register (it’s quick and free) or sign in now.

Speech Bubbles

Please read our Comment Policy before commenting.