KPMG accused of misleading regulator over Carillion audit
Financial Reporting Council makes formal complaint against accounting firm
KPMG will face a disciplinary tribunal over allegations that it provided false or misleading information to the UK accounting regulator regarding its audits of Carillion and another outsourcer.
The Financial Reporting Council announced a formal complaint against the accounting firm and several individuals there, including former partner Peter Meehan, who led KPMG’s audits of Carillion.
The regulator alleged that KPMG provided false or misleading information or documents in connection with its routine quality inspections of the audits of Carillion for the financial years ending December 2016 and of Regenersis, another outsourcer, for the year ending June 2014.
The inspections took place after the audits were completed. The FRC’s complaint did not allege that KPMG or its staff committed misconduct during the audits or that the financial statements of Carillion or Regenersis were not properly prepared.
The FRC has yet to announce the findings of its separate investigations into possible failings in KPMG’s audits of Carillion, whose collapse in January 2018 with £7bn of liabilities and just £29m of cash has fuelled debate over how the UK audit sector could be reformed to make it more effective.
The case is scheduled to be heard by a disciplinary tribunal in January 2022.
A decision by the FRC to proceed with a formal complaint and a tribunal hearing indicated that it could not reach a settlement with the firm or individuals accused of wrongdoing.
KPMG said it was taking the matter “extremely seriously” .
“We discovered the alleged issues in 2018 and 2019, and on both occasions immediately reported them to the FRC and suspended the small number of people involved,” it said.
“The allegations in the formal complaint would, if proven, represent very serious breaches of our processes and values. We have cooperated fully with our regulator throughout their investigation.”