The Financial Reporting Council (FRC) has issued non-financial sanctions against ‘Big Four’ accountancy firm KPMG in relation to its statutory audits of the financial statements of Foresight 4 VCT plc.
The sanctions are specifically in relation for the 2012/2013, 2013/2014 and 2014/2015 financial years.
The FRC said KPMG admitted “shortcomings” in its audits of figures relating to the company’s distributable reserves. These failings may have led to misstatements relating to distributable reserves in the company’s financial statements, which were later restated in 2016 and 2018.
As such the FRC imposed an official reprimand and an order that KPMG monitor compliance with revised audit procedures on company capital and distributions, and report on this to the FRC’s Executive Counsel.
The watchdog said the sanctions reflect the fact that KPMG has taken steps to improve its audit procedures on distributions; the breaches of Relevant Requirements were not intentional, dishonest, deliberate or reckless; there is no suggestion that there were insufficient distributable reserves to cover distributions made by the company.
It also said that the misstated figures for the company’s reserves did not affect the company’s profits or net asset value.