Auditing giant KPMG has been fined £14m in what has been described as one of the heftiest fines in the United Kingdom’s audit history.
Former staff of the company had reportedly forged documents that misled the Financial Reporting Council (FRC), which regulates accountants in the United Kingdom, about companies, including the outsourcer Carillion.
The Financial Reporting Council (FRC) described the infractions as extremely serious while noting that KPMG will also face a severe reprimand over its misconduct.
While £14m is what KPMG will now have to pay for its transgressions, the sum would have been much higher. According to Mark Ellison, QC and rep for the FRC, KPMG would have had to pay £20 million – unarguably the highest fine yet, ahead of the £15m paid by Deloitte in 2020 – but the penalty was reduced because KPMG cooperated and willingly admitted its guilt.
On the settlement with the FRC, Jon Holt, chief executive of KPMG, noted that the accounting firm was deeply sorry for the misconduct, admitting it was unjustifiable and wrong, a betrayal of the processes and values at KPMG.
It’s unclear when KPMG will pay the fine, but the effect of the sanction on the company is already being felt across the industry.