KPMG faces record £14.4m fine after auditors misled watchdog during Carillion inspection
KPMG is set to be hit with a record £14.4m fine after a tribunal found five of its former staff deliberately misled the UK’s audit watchdog by forging documents during routine inspections of their work.
The tribunal heard the UK’s Financial Reporting Council (FRC) had agreed to reduce KPMG’s fine from a sum of £20m, after it worked with investigators and admitted wrongdoing.
Five former KPMG staff now face multi-year bans from the profession and tens-of-thousands of pounds in fines, after the tribunal found the group guilty of misconduct during FRC inspections into KPMG’s audits of software developer Regenersis and collapsed construction giant Carillion.
The tribunal said four of the men deliberately misled the watchdog, as it said junior auditor Pratik Paw – who was just 25-years-old at the time of the 2017 inspection into KPMG’s Carillion audit – had not acted dishonestly but had instead acted without integrity during the inspection.
The FRC said ex-KPMG partner Peter Meehan, who previously blamed junior staff for forging the documents with him knowing, should face a £400,000 fine as it called for him to be banned from the accountancy profession for 15 years.
The watchdog also said three others – Alistair Wright, Richard Kitchen, and Adam Bennett – should be fined £100,000 each and banned from acting as accountants for 12 years.
Meanwhile, the regulator said Paw, who had not yet qualified as an accountant, should be fined £50,000.
The tribunal is now set to decide which penalties the former-KPMG staff will face, after hearing from lawyers acting on behalf of the five men.
KPMG UK chief executive Jon Holt said: “”As I said back at the start of the tribunal, we are deeply sorry that such serious misconduct occurred in our firm. It was unjustifiable and wrong. It was a violation of our processes and a betrayal of our values.”
“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 as a result.”