KPMG has been “severely reprimanded” by the Financial Reporting Council (FRC), resulting in a £6m fine.
The accountancy firm has been ordered to undertake an internal review over the way it audited insurance company, Syndicate 218, by the FRC, with KPMG partners Mark Taylor and Anthony Hulse both fined £100,000 each as a result of the audit. Syndicate 218 director, Douglas Morgan was also reprimanded.
Big Four firms are often fined for their work, however, an FRC spokesman said: “While [a reprimand] has no effect financially, it is a stain on their reputation and will be considered by other companies when they are thinking about changing their auditors.”
The FRC said in both 2008 and 2009, the accountancy firm made “insufficient inquiries” about the process that Syndicate 218 used when reviewing insurance claims and to ensure the company’s financial reserves. The regulator said there was “insufficient evidence to provide an unqualified audit opinion”.
A KPMG spokesman said: “We are disappointed that aspects of our 2008 and 2009 audits were found not to have met the standards set by our regulator. Since this work was conducted, we have changed our insurance audit approach considerably, including how we work with actuaries when auditing insurance claims reserves.
“We will continue to work hard to put historical matters such as this to rest as quickly as possible.”