Accountancy group KPMG has been given a £14.4m fine after a tribunal found it had deliberately misled regulators during the course of its work for construction firm Carillion.
The fine was given by the Financial Reporting Council (FRC) after it was determined an accountant formerly linked to KPMG reportedly forged documents and deceived regulators. It found that when the FRC tried to inspect 2016 audits relating to the company – and those of software firm Regenesis from 2014 – former KPMG staff invented documents to show inspectors and attempt to pass them off as having been issued at the time. Carillion collapsed in January 2018 with debts of £7bn and leading to the loss of 3,000 jobs.
During the tribunal hearing in January 2022, KPMG admitted responsibility for the misconduct, an admission which saw the original FRC fine of £20m reduced. The penalty is the second largest ever given to an accountancy practice, following the £15m fine issued to Deloitte in 2020 for its audit work at software company Autonomy.
Commenting on the settlement with the FRC, Jon Holt, chief executive of KPMG, said: “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.”
“We are committed to serving the public interest with honesty and integrity. We have worked hard, and with complete transparency to our regulator, to assure ourselves that this matter does not represent the wider culture or practice of our firm.”
The tribunal will continue over the coming weeks to consider penalties for individual staff. The FRC is seeking to fine five former KPMG employees between £50,000 and £400,000 and ban them from the profession for up to 15 years, alleging that they provided false or misleading information or documents to the regulator.