KPMG to face disciplinary tribunal over Carillion audit
KPMG is set to face a disciplinary tribunal over allegations that it gave false information to the accounting regulator during an audit inspection of collapsed Black Country firm Carillion.
The Financial Reporting Council (FRC) said the complaint alleges that KPMG and several individuals gave false and misleading information and documents to the watchdog when it was carrying out a quality review of two audits.
One was for failed Wolverhampton-based outsourcing giant Carillion – which went bust in January 2018 with debts of more than £7 billion – and the other was a 2014 audit of then technology group Regenersis.
Among the individuals who have been served with the formal complaint is Peter Meehan, the engagement partner for the Carillion audit.
The FRC said the complaint does not claim the audits were wrongly done or that financial statements were not properly prepared.
A disciplinary tribunal will review the formal complaint case, with a hearing scheduled to start on January 10.
A KPMG spokesman said the group took the matter "extremely seriously" and is co-operating fully with the FRC.
He said: "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.
"The allegations in the formal complaint would, if proven, represent very serious breaches of our processes and values."
The 2016 audit of Carillion's financial statements is being investigated in separate ongoing investigations, with KPMG facing a potentially hefty fine when the FRC probe wraps up in coming months.
KPMG, which has an office in Birmingham, is facing mounting pressure over the quality of its audits after it was recently fined £13 million over the sale of bedmaker Silentnight to a private equity firm in 2011.
The FRC tribunal found that one of KPMG's partners helped push client Silentnight towards insolvency, enabling HIG Capital to buy the business out of administration.
KPMG and other 'Big Four' accountancy firms are in the process of spinning off their restructuring arms in a bid to avoid conflicts of interest.
It comes ahead of an expected Government move which would force them to split their audit divisions from the rest of the business to ensure they stay independent.
