KPMG admits to misleading UK watchdog

KPMG said it misled the UK audit watchdog over major work it carried out for collapsed Carillion and data services company Regenersis. 

Six former employers at the auditing giant are accused by the Financial Reporting Council of acting “with a lack of integrity in dishonestly or recklessly misleading the regulator,” on the first day of a five-week London disciplinary tribunal Monday.

The claims relate to a 2015 audit of Regenersis, now known as Blancco Technology Group, and a 2017 audit of Carillion. Audits of the Carillion financial statements are the subject of a separate ongoing investigation.

The FRC opened an investigation after KPMG self-reported concerns related to the Carillion audit, and later widened it to include Regenersis. KPMG admitted to the misconduct. 

“The misconduct that this tribunal will hear about over the coming weeks is disturbing and upsetting for me and for my colleagues,” Jon Holt, CEO of KPMG, said in an emailed statement, stating that the company has co-operated fully with the investigation.

“KPMG considers the matters forming the basis of these proceedings to have been wholly unacceptable departures from the proper relationship between auditor and regulator,” the company said in legal filings prepared for the tribunal.

The FRC does not allege misconduct in the performance of the relevant audits, or that the financial statements were not properly prepared, the regulator said. 

KPMG has faced ongoing criticism over the quality of its work and company faces an accumulation of disciplinary action over its audits of Carillion, the inquiry and a £250m suit from Carillion’s receiver.

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