KPMG, one of the world’s “big four” auditors, has been slapped with a record fine of £21 million ($26 million) by Britain’s accounting regulator, the Financial Reporting Council (FRC).
- The fine comes as a result of KPMG’s “textbook failure” in conducting audits of Carillion, a major government contractor that collapsed in January 2018 and triggered a comprehensive review of auditing standards.
- The FRC highlighted the exceptional number, range, and seriousness of deficiencies in KPMG’s audits of Carillion, leading to the highest fine ever imposed by the watchdog.
- Failures identified in the audits included KPMG’s failure to challenge Carillion management and a loss of objectivity in their work.
- KPMG audit partner Peter Meehan, who is no longer with the firm, was fined £350,000 after admitting to failures and cooperating with the investigation.
- The total fine would have been £30 million, but it was reduced due to KPMG’s admissions and cooperation during the investigation.
- KPMG’s CEO and senior partner in the UK, Jon Holt, expressed remorse for the firm’s failings and acknowledged the need for significant improvements in controls and oversight.