FRC to begin hearing of KPMG audit of Carillion in January 2022

The Financial Reporting Council (FRC) will begin its hearing of the Formal Complaint of ­the Executive Counsel against KPMG in regard to its audit of Carillion plc on 10 January 2022.

The tribunal, which was first announced on 1 September 2021, alleges “misconduct” against KPMG and several individual respondents regarding the provision of “false and misleading” information of two audits carried out for the period ended 31 December 2016.

It also alleges “misconduct” in relation to the audit of the financial statements of Regenersis for the period ended 30 June 2014.

The FRC opened an investigation in November 2018 after KPMG had self-reported certain matters relating to the review of the 2016 Carillion audit.

The scope of the investigation was expanded in July 2019 to include the review of the 2014 Regenersis audit after KPMG had again self-reported certain matters relating to that review.

In response, a subsequent Formal Complaint was issued by the FRC on 15 March 2021.

However, the council stated: “The Formal Complaint 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, as announced on 29 January 2018 and 19 March 2018 respectively.”

A KPMG UK spokesperson said: “We take this matter extremely seriously. We discovered the alleged issues in 2018 and 2019, and on both occasions immediately reported them to the FRC and suspended the small number of people involved.

“The allegations in the Formal Complaint would, if proven, represent very serious breaches of our processes and values. We have cooperated fully with our regulator throughout their investigation.”