Former staff also punished for misleading regulator
Four former KPMG auditors at have been fined and banned from the sector’s professional body for their part in misleading the UK’s audit watchdog over their audits of doomed construction giant Carillion.
The Financial Reporting Council (FRC) today announced that KPMG had been fined £14.4m, as well as £3.95m in costs, the biggest penalty in UK audit history.
Former partner Peter Meehan was fined £250,000 and banned from the Institute of Chartered Accountants in England and Wales for 10 years.
Three others – Alistair Wright, Adam Bennett and Richard Kitchen – were fined £45,000, £40,000, and £30,000 respectively, with the former two each banned from the ICAEW for eight years and Kitchen banned for seven.
Pratik Paw, a junior employee who had not qualified as an accountant before he was told to forge documents by his superiors, was severely reprimanded by the FRC.
The fines had been expected since May this year, when an FRC tribunal found that it had been supplied forged documents and misleading information by KPMG when conducting quality reviews into the audits of Carillion and software firm Regenesis.
Carillion had been the UK’s second biggest contractor and was working on 420 public sector contracts when it went bust in January 2018.
Auditors were found to have created false meeting minutes and retroactively edited spreadsheets before sharing them with the regulator.
Following the announcement of the fines, Elizabeth Barrett, executive counsel at the FRC, said: “Misconduct that deliberately undermines the FRC’s ability to monitor and inspect the effectiveness of audits is extremely serious because it obstructs the FRC’s ability to protect the public interest.
“This case underlines the need for all professional accountants, regardless of seniority, to be aware of their individual responsibility to act honestly and with integrity in all areas of their work.”