KPMG should take blame for Carillion scandal, not junior accountant Pratik Paw, critics say
Critics have said the Big Four accountancy firms should flatten their hierarchies and ensure junior colleagues are able to challenge their superiors, to ensure low ranking workers are not blamed for accounting scandals.
The comments come as regulators have called for KPMG junior Pratik Paw to be fined £50,000 over his role in the scandal which saw KPMG mislead the UK’s accounting watchdog during an inspection of the Big Four firm’s audit of Carillion.
The calls come after Paw – who was 25 at the time and the most junior member of the Carillion audit team – was told by his bosses to type up meeting minutes and insert them into a document from an earlier date.
A tribunal ruled that in typing up the notes, and following the orders of his superiors, Paw had not acted dishonestly. However, the tribunal said the junior had acted without integrity, as it claimed he should have questioned his managers.
Paw now faces a “life changing” fine worth a sum almost twice his annual salary, and a four-year ban from the profession he had hoped to build a career in, for completing the task he had been told to do.
Lawyers acting on behalf of Paw said the sanctions being proposed would be “vindictive,” as they claimed the two-and-a-half years-long investigation into the junior had left him depressed and unwilling to leave the house.
One director at a design firm argued Paw is set to take the blame for “errors that result from broader organizational failures” as suggested the junior accountant is “facing a fine and misconduct hearing for not having the confidence to speak up and challenge what he was being asked to do”.
Middlesex University lecturer Toby York said the punishments Paw faces will come as a “frightening lesson for accounting students,” as he argued the problem lies in the culture of KPMG.
Others commenting on the website Reddit said they are looking to leave the audit profession “immediately” on hearing of the fine, as they argued a career in the Big Four is not worth it, if juniors are to held liable for the failures of their managers.
One Redditor branded the punishment as “absolutely absurd,” as another said that from his experiences “no one questions” the senior audit managers.
Another said “It’s not the job of staff to question what their senior teaches or directs them to do. The engagement would never get completed if that happened.”