Business Essentials for Professionals


KPMG To Face $18 Million Penalties For Misrepresenting Before Regulator

KPMG To Face $18 Million Penalties For Misrepresenting Before Regulator
KPMG faces a 14.4 million pound ($17.6 million) penalties after admitting to misleading regulators during spot checks on audits of Carillion and Regenersis.
The British auditing regulator, the Financial Reporting Council (FRC), told a London tribunal on Thursday that it was seeking a record 20 million pound penalties, which was cut to 14.4 million pounds since KPMG self-reported and cooperated.
"It was unjustifiable and wrong," KPMG's Chief Executive Jon Holt said in a statement, adding: "It was a violation of our processes and a betrayal of our values."
KPMG, one of the Big Four audit firms that dominate the market alongside EY, Deloitte, and PwC, admitted to misconduct in January before an earlier London tribunal and apologised again at the opening of a two-day hearing.
"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," Holt said.
Five former KPMG workers were found guilty of misconduct following a normal FRC review of a Regenersis audit from end-June 2014 to end-December 2016.
The FRC claims they gave incorrect or misleading information or documents to the regulator and is attempting to punish them between 50,000 and 400,000 pounds and bar them from the profession for up to 15 years.
The charges were denied by the five.
Sanctions will be decided by the tribunal at a later date.
KPMG faced the same claims because it is liable for the actions of its employees.
The hearings did not dig into the audit work itself. Separately, the FRC is looking into KPMG's audits of Carillion, whose collapse in 2018 prompted suggestions for a sector shake-up, though legislation has yet to be introduced in parliament. more info
Separately, KPMG has pledged to defend itself against a 1.3 billion pound ($1.6 billion) lawsuit filed by Carillion's liquidators for failing to raise "red lights," in one of the largest claims against top accountants to date.

Christopher J. Mitchell

Markets | Companies | M&A | Innovation | People | Management | Lifestyle | World | Misc