business news

FRC serves formal complaint to KPMG for giving misleading information

FRC serves formal complaint to KPMG for giving misleading information
FRC serves formal complaint to KPMG for giving misleading information

Renowned professional services firm KPMG International Ltd. has reportedly been accused by the Financial Reporting Council (FRC) of providing misleading information about the collapsed construction company Carillion. This comes as a part of a routine review on the quality of audit conducted by KPMG on Carillion's accounts, stated the financial watchdog.

For the uninitiated, the construction major had imploded in 2018 under the debt of £7 billion (USD 9.8 billion), hitting 450 building projects and thousands of jobs.

The FRC stated that it has filed a similar misconduct complaint against the technology group- Regenersis.

It further added that the formal complaint asserts misconduct against KPMG and various individuals for delivering allegedly false information and/or documents in connection with the inspections of the two audits conducted by KPMG.

The formal complaint does not claim the audits were wrongly performed or that the financial statements were not prepared properly, the FRC pointed out.

The individuals who are reportedly facing the formal complaints are Peter Meehan, the former partner and in charge of the Carillion audit, and Stuart Smith, who had conducted the Regenersis audit.

A disciplinary tribunal is expected to review the case, with the hearing scheduled to commence on January 10.  

According to credible sources, the 2016 audit of Carillion is being reviewed in separate ongoing investigations. As a result, KPMG is likely to face a potentially heavy fine when the FRC probe is completed in the upcoming months.  

Commenting on the matter, a KPMG spokesperson stated that the company is extremely serious about the case. The company had identified the alleged issues in 2018 and 2019 and had immediately reported them to the FRC on both occasions. It had also suspended the individuals involved in the case, added the KPMG spokesperson.

The company spokesperson also mentioned that if the allegations are proven, it would represent very serious breaches of the firm’s processes and values. The company has fully cooperated with its regulator during the investigation.

Source credits: https://www.bbc.co.uk/news/articles/c8znzxe5ewxo

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