Regulator hits Big Four firm
KPMG fined £4m and facing three year audit scrutiny
The Financial Reporting Council (FRC) imposed sanctions on KPMG and its partner Andrew Walker after both parties admitted their conduct fell short of the standards expected.
The FRC said that following KPMG’s admission of misconduct the fine has been reduced from £5m to £4m and KPMG will pay £500,000 towards costs. Mr Walker has been fined £125,000 – discounted to £100,000 – and “severely reprimanded”.
A number of KPMG’s audits over the next three years will be subject to an “additional review” by an audit quality team reporting to the FRC.
The misconduct occurred after the Co-op Bank’s ill-fated merger with Britannia Building Society in 2009,which ultimately contributed to the bank discovering a £1.3 billion black hole in its accounts in 2013.
Britain’s big four accountancy firms – which also include PwC, Deloitte and EY – have faced criticism over the quality of audits with regulators and MPs calling on them to be broken up after a string of auditing failures on major firms including BHS and Carillion.
The regulator itself is set to be replaced by a new body following criticism of its operations in the wake of Carillion’s collapse.