KPMG admits financial regulator misled in Carillion audits

Aaron Morby 2 weeks ago
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Accountancy giant KPMG auditors misled regulators during inspections of their work on audits including those of contractor Carillion, the accounting firm’s UK boss said.

The admission of misconduct was made on the first day of an industrial tribunal brought by the Financial Reporting Council where the accountancy firm and six of its former auditors are accused of forging documents and misleading its inspectors.

KPMG’s UK chief executive Jon Holt explained that the firm had discovered the misconduct in its own internal investigations, and immediately reported it to the FRC.

In a media statement, he admitted it was clear to him that misconduct had occurred and that the regulator was misled

“The misconduct that this Tribunal will hear about over the coming weeks is disturbing and upsetting for me and for my colleagues,” he said.

“We became aware of the misconduct at the centre of this case as a result of our own internal investigations and immediately reported it to our regulator. We have co-operated fully with their investigation since then.

“This misconduct is a violation of our processes and clearly against our values.

“It is unacceptable, we do not tolerate or condone it in any way, and I am very sorry that it occurred in our firm.

“Since this misconduct came to light, we have worked hard, and with complete transparency to our regulator, to assure ourselves that it does not represent the wider culture or practice of our firm.”

Holt added: “I very much regret that individuals involved in this case failed to act properly or to call out the inappropriate behaviour of others, and I am saddened that some relatively junior former members of staff are facing very serious regulatory sanction at an early point in their careers.”

The FRC is also running two other investigations into possible failings in Carillion’s audits, while liquidators also prepare a separate £250m negligence claim against KPMG.

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