UK FRC fines KPMG £3.2m over failed Quindelll audit
Adesola Afolabi was a businessamlive reporter and Head of Financial desk.
UK’s accounting financial watchdog, the Financial Reporting Council (FRC), has fined KPMG £3.2 million ($4.3 million) on Monday for failings in its audit of Quindell Plc.
The fine is coming after KPMG and its employee William Smith, who was fined 84,000 pounds, both failed to ensure that Quindell’s financial statements for 2013 and 2014 were free from material misstatement.
The legal services firm twice restated its accounts leading to heavy losses.
KPMG however apologized in a statement on Monday for failing to press Quindell’s management harder over the company’s accounts.
According to a Reuters report, a spokesman for KPMG said, “We accept the FRC’s findings that in two specific areas of the audit, our challenge for the year ended 31 December 2013 should have gone further.”
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’s work for a company owned by the Gupta family.
The ‘big four’ 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’ claims about their accounts.
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The FRC is also investigating KPMG’s auditing of the collapsed construction and outsourcing firm Carillion.
Once close to being one of Britain’s 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 by Britain’s Serious Fraud Office and the FRC over its business and accounting practises
KPMG’s fine was discounted from an original £4.5 million pounds and Smith’s from £120,000 pounds because they chose to settle the case, the FRC said.