KPMG slapped with £14.4m fine over Carillion audit

KPMG has been slapped with its largest-ever UK fine for providing "false and misleading" information to the accounting watchdog during inspections of its audits of collapsed outsourcer Carillion and another British firm Regenersis.

The £14.4m fine plus almost £4m in costs was issued by a tribunal after the Financial Reporting Council (FRC) found the accounting firm provided false and misleading documents and information to it. It was reduced from £20m after KPMG admitted wrongdoing.

Four former KPMG auditors, including Carillion audit partner Peter Meehan, have been fined and banned from the profession

A five-week tribunal in January and February found the FRC was misled by KPMG staff during routine inspections of the audit of Carillion’s accounts for 2016 and the 2014 accounts of IT firm Regenersis, later renamed Blancco Technology Group.

They had “made, or connived in or were knowingly associated with making, certain false or misleading representations,” to the FRC’s Audit Quality Review team, the tribunal said.

“The seriousness of the misconduct that we have found proved scarcely needs explanation.”

Government outsourcer Carillion collapsed in 2018, sparking concerns in government about the financial viability of other companies in the sector.

Meehan was fined £250,000 and banned from membership of the Institute of Chartered Accountants in England and Wales for 10 years.

Audit senior managers Alistair Wright and Adam Bennett were fined £45,000 and £40,000 respectively and given eight-year bans.

Richard Kitchen was fined £30,000 and banned for seven years. Another auditor, Stuart Smith, was fined £150,000 and banned for three years under a settlement with the FRC before the tribunal started.