KPMG receives largest UK fine for misleading regulator

KPMG has been fined £14.4mn for misleading the accounting regulator during inspections of its audits of collapsed outsourcer Carillion and another UK company, Regenersis.

The fine, the largest ever against KPMG in the UK, was imposed by an industry tribunal which found that the Big Four firm provided false and misleading documents and information to the Financial Reporting Council.

Four former KPMG auditors, including Carillion audit partner Peter Meehan, were fined and banned from the profession. A fifth, more junior auditor was severely reprimanded but escaped a fine despite the FRC’s request that he be made to pay £50,000.

KPMG also agreed to pay costs of £3.95mn, taking its total bill to almost £18.4mn.

The fines relate to KPMG’s interactions with the regulator during inspections of its work. The quality of KPMG’s auditing at Carillion is the subject of a separate investigation, which is still under way.

Jon Holt, UK chief executive of KPMG, said he accepted the tribunal’s findings.

“The behaviour underlying this case was wrong and should never [have] happened,” he said.

“We reported it to our regulator as soon as we uncovered it and we have co-operated fully with their investigation. Since then, we have worked hard and with complete transparency to our regulator, to assure ourselves that the behaviour of the individuals concerned does not reflect the wider culture of the firm.”

Carillion’s liquidators have also launched a £1.3bn legal claim against KPMG, which has denied wrongdoing and pledged to defend the case.

A separate legal action seeking to disqualify some of Carillion’s former directors from running UK companies is also under way.