KPMG’s UK boss has admitted the auditor misled the accounting watchdog during a review of its auditing of Carillion.
A tribunal examining information KPMG employees gave to the Financial Reporting Council (FRC) when the watchdog was carrying out a routine check of its auditing of Carillion’s 2016 accounts began this week.
The FRC said it had queried the low number of UK construction services contracts KPMG had interrogated at Carillion, according to The Times. The watchdog has claimed that auditors then came up with a new record of how many contracts it had looked into. The FRC has also alleged inconsistencies regarding minutes of meetings with auditors of Carillion’s overseas operations.
A statement from the company’s UK chief executive Jon Holt said: “It is of course for the tribunal to reach a conclusion on the allegations as they relate to the individuals concerned,” he said in a statement. “Nevertheless, it is clear to me that misconduct has occurred and that our regulator was misled.”
The alleged misconduct came to light when KPMG reported it to the FRC following internal investigations.
Holt said the evidence the tribunal will hear in the coming weeks was “disturbing and upsetting” for him and colleagues at the firm. “We will assist the tribunal in any way we can, as we have co-operated fully with the investigation into these matters,” he added. “At the same time, nothing should detract from the frustration that I and my colleagues feel about what has occurred, or our determination to ensure that such misconduct will never be repeated at KPMG.”
The tribunal is also hearing evidence about alleged misconduct related to the audit inspection of Regenersis.
A separate FRC investigation into KPMG’s auditing of Carillion’s accounts between 2014 and it collapse in 2018 is ongoing. The accountant is expected to reach a settlement with the watchdog, which could cost it up to £25m, according to reports.
An expected legal claim against KPMG by the Official Receiver, which is overseeing the liquidation of Carillion, is also progressing. It could seek damages of up to £1bn from the firm over its auditing of the contractor.
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