KPMG penalized for audit failings
Print Edition
Britain鈥檚 accounting watchdog fined KPMG 3.2 million pounds (US$4.3 million) yesterday for failings in its audit of Quindell Plc, after the legal services firm twice restated its accounts leading to heavy losses.
KPMG and its employee William Smith, who was fined 84,000 pounds, both failed to ensure that Quindell鈥檚 financial statements for 2013 and 2014 were free from material mis-statement, the Financial Reporting Council said.
KPMG apologized in a statement for failing to press Quindell鈥檚 management harder over the company鈥檚 accounts. 鈥淲e accept the FRC鈥檚 findings that in two specific areas of the audit, our challenge for the year ended 31 December 2013 should have gone further,鈥 a spokesman for KPMG said.
The fine in Britain comes as the global network of accounting firms that make up KPMG is under pressure. It is facing an inquiry in Britain over its audit of failed outsourcer Carillion and scrutiny of its South African arm鈥檚 work for a company owned by the Gupta family.
The 鈥渂ig four鈥 accounting firms, including KPMG, are facing calls to break up into smaller parts from lawmakers in Britain who allege their dominance of the market means they do not sufficiently challenge clients鈥 claims about their accounts.
THe FRC is also investigating KPMG鈥檚 auditing of the collapsed construction and outsourcing firm Carillion.
Once close to being one of Britain鈥檚 blue chip financial firms, the AIM-listed Quindell saw its market value collapse in 2015 after regulators launched probes into its financial accounts.
Quindell, which has since been rebranded as Watchstone, is still being probed over its business and accounting practises.
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