KPMG accused of providing ‘false and misleading’ information to audit watchdog

The action comes after KPMG was fined a near-record £13 million just weeks ago over the sale of bedmaker Silentnight in 2011.

A formal complaint has been filed against KPMG and its current and former staff by the accounting regulator for allegedly submitting false information as part of audit inspections of collapsed firm Carillion and Regenersis (Liam McBurney/PA)
A formal complaint has been filed against KPMG and its current and former staff by the accounting regulator for allegedly submitting false information as part of audit inspections of collapsed firm Carillion and Regenersis (Liam McBurney/PA)

A formal complaint has been filed against KPMG and its current and former staff by the accounting regulator for allegedly submitting false information as part of audit inspections of collapsed firm Carillion and Regenersis.

The Financial Reporting Council (FRC) said the disciplinary complaint alleges that KPMG and several individuals gave false and misleading information and documents to the watchdog when it was carrying out a review of two audits.

One of the audits was for failed outsourcing giant Carillion and the other was a 2014 audit of then technology group Regenersis, according to the FRC

It comes amid mounting pressure on KPMG over the quality of its audits after it was fined a near-record £13 million just weeks ago 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.

One of the audits was for failed outsourcing giant Carillion (Yui Mok/PA)

The individuals who have been served with the formal complaint in the latest case include Peter Meehan, the engagement partner for the Carillion audit, and Stuart Smith, the engagement partner for the Regenersis 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 and other Big Four accountancy firms are spinning off their restructuring arms in a bid to avoid conflicts of interest in its business.

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, following the Carillion demise and other major corporate failures.

Register for free to continue reading

Registration is a free and easy way to support our truly independent journalism

By registering, you will also enjoy limited access to Premium articles, exclusive newsletters, commenting, and virtual events with our leading journalists

Please enter a valid email
Please enter a valid email
Must be at least 6 characters, include an upper and lower case character and a number
Must be at least 6 characters, include an upper and lower case character and a number
Must be at least 6 characters, include an upper and lower case character and a number
Please enter your first name
Special characters aren’t allowed
Please enter a name between 1 and 40 characters
Please enter your last name
Special characters aren’t allowed
Please enter a name between 1 and 40 characters
You must be over 18 years old to register
You must be over 18 years old to register
Opt-out-policy
You can opt-out at any time by signing in to your account to manage your preferences. Each email has a link to unsubscribe.

By clicking ‘Create my account’ you confirm that your data has been entered correctly and you have read and agree to our Terms of use, Cookie policy and Privacy notice.

This site is protected by reCAPTCHA and the Google Privacy policy and Terms of service apply.

Already have an account? sign in

By clicking ‘Register’ you confirm that your data has been entered correctly and you have read and agree to our Terms of use, Cookie policy and Privacy notice.

This site is protected by reCAPTCHA and the Google Privacy policy and Terms of service apply.

Register for free to continue reading

Registration is a free and easy way to support our truly independent journalism

By registering, you will also enjoy limited access to Premium articles, exclusive newsletters, commenting, and virtual events with our leading journalists

Already have an account? sign in

By clicking ‘Register’ you confirm that your data has been entered correctly and you have read and agree to our Terms of use, Cookie policy and Privacy notice.

This site is protected by reCAPTCHA and the Google Privacy policy and Terms of service apply.

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged inPlease refresh your browser to be logged in