Former boss of KPMG fined and reprimanded by financial authorities

Nicola Quayle

The former head of KPMG in Manchester has reprimanded been by the Financial Reporting Council and the firm has been fined £700,000.

The sanctions against Ms Quayle related the audit of the financial reports of an unnamed company in the 2015/2016 financial year.

It was announced that Nicola Qualye had been replaced as head of the Manchester office by KPMG less than a month ago.

As a result of an investigation a series of sanctions have been imposed.

There is a financial sanction of £700,000 which has been discounted for admissions and early disposal to £455,000.

There has been an official reprimand and a declaration by Executive Counsel that, as a result of the adverse findings that the Statutory Audit Report did not satisfy the Relevant Requirements.

KPMG has also been told to carry out a quality performance review of three Statutory Audits for which Ms Quayle is the Statutory Auditor.

Ms Quayle has been fined £45,000 which has been discounted for admissions and early resolution to £29,250.

She has also been reprimanded and told to undertake appropriate training, in a format to be agreed with the FRC.

The FRC said the breaches were limited in nature but were aggravated by the fact that:

1. the FRC had made auditors aware, through publications in 2014 and 2015, that complex supplier arrangements would be an area of particular attention in its reviews;

2. both KPMG and Ms Quayle have poor recent regulatory records;

3. Ms Quayle held senior management responsibilities within KPMG.

Ms Qualye has agreed that she will not undertake statutory audits of Public Interest Entities for two years from the date of the decision notice.

She has already received fines from KPMG in relation to the FY2016 audit, and in respect of her prior regulatory record.

Claudia Mortimore, Deputy Executive Counsel to the FRC, said, “This is a measured and proportionate package of sanctions, which balances on the one hand the limited nature of the breaches, which did not call into question the truth or fairness of the financial statements, with the fact that auditors should have been on alert to pay particular attention to these types of complex supplier arrangements.

“Professional scepticism remains at the core of an auditor’s duty and the FRC will take appropriate action where it has been lacking, as in this case.”

In accordance with the FRC’s Publications Policy, the FRC Executive having considered representations from the company has concluded that in all the circumstances naming the company is not fair and necessary in this case.

A KPMG UK spokesperson said: “We regret that specific aspects of our audit of this company for the 2015/2016 financial year did not meet the required standards.

“As the FRC makes clear, there is no question as to the truth and fairness of the financial statements. Audit quality is of paramount importance to our firm and we have updated our audit processes and procedures to address the areas of concern.”

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