Big Four

FRC misconduct hearing against KPMG resumes

‘False and misleading’ information was allegedly provided to the FRC when it carried out audit quality reviews of two KPMG audits 

A hearing on the FRC’s complaint against KPMG, a former KPMG partner, and certain former KPMG employees has resumed before a disciplinary tribunal this morning (12 May), relating to its previous audits of Carillion and Regenersis. 

The complaint alleges misconduct against the Big Four firm, saying it allegedly provided “false and misleading” information and/or documents to the FRC when it carried out audit quality reviews of the two audits in question. 

It particularly relates to the audit of the financial statements of Carillion plc for the period ended 31 December 2016 and the audit of the financial statements of Regenersis plc for the period ended 30 June 2014.

The FRC said allegations in the complaint are “made against each of the individuals only in respect of their own conduct and do not suggest that any individual was responsible for the Misconduct of any of the other individuals subject to the Formal Complaint”.

It also said it does not allege misconduct in the performance of the relevant audits, “nor does it allege that in either case the financial statements had not been properly prepared”. The audit, and preparation, of the 2016 Carillion financial statements are the subject of separate investigations, however, as announced on 29 January 2018 and 19 March 2018 respectively.

 

The FRC’s investigation first opened in November 2018 after KPMG had self-reported certain matters relating to the review of the 2016 Carillion audit. The investigation was expanded in July 2019 to include the review of the 2014 Regenersis audit after KPMG had also self-reported certain matters relating to that review. 

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