The penalties for financial wrongdoing just aren’t fit for purpose

One of the largest fines in UK audit history has just been handed out – but its impact will be minimal, argues Chris Blackhurst

Fining a wealthy accountancy firm does not make anyone quake (PA)

There are times when you do a double take. So it was, with the headline: “KPMG to be fined £14m for forging documents over Carillion audit.”

To recap, Carillion, the outsourcing group, went down with £7bn of debts in January 2018. Three thousand people lost their jobs and hundreds of projects for its clients were badly affected, including hospitals, schools and roads.

Now, it transpires, staff at KPMG, the company’s auditor, forged documents and misled the regulator over audits at Carillion and another firm between 2014 and 2016. The Financial Reporting Council, which regulates accountants, is imposing the £14.4m fine along with a “severe reprimand” over the “extremely serious” misconduct of the firm’s former employees. It would have been more, £20m, but for KPMG’s cooperation (they alerted the regulator) and willingness to admit guilt.