Carillion investigation results in misconduct allegations for Big Four firm
KPMG is to face disciplinary action after the Financial Reporting Council (FRC) alleged it provided “false and misleading information” during an investigation into its audits of the collapsed contractor Carillion.
The FRC’s formal complaint is against the firm and several staff, including former partner Peter Meehan and Stuart Smith, who is currently suspended. They will face a disciplinary tribunal in January 2022.
A KPMG UK spokesperson said: “We take this matter extremely seriously. We discovered the alleged issues in 2018 and 2019, and on both occasions immediately reported them to the FRC and suspended the small number of people involved.
“The allegations in the Formal Complaint would, if proven, represent very serious breaches of our processes and values. We have cooperated fully with our regulator throughout their investigation.”
This disciplinary action relates to the investigation into the Carillion audits and not the audits themselves, which are subject to separate investigations.
Carillion collapsed in a matter of weeks, and was put into liquidation in early 2018 with debts of £6.9bn. The Wolverhampton-headquartered firm employed more than 18,000 people in the UK when it failed, making it the UK’s biggest corporate failure in decades.
Investigations have been undertaken by Parliament, the National Audit Office and the FRC. Earlier this year the Insolvency Service said it was seeking to ban eight former Carillion directors from holding senior boardroom positions.
The FRC’s investigation alleges misconduct through “the provision of allegedly false and misleading information and/or documents” to the FRC in connection with inspections of the audit of Carillion’s 2016 accounts and the audit of Regenersis’s 2014 accounts.
The investigation was opened in November 2018 after KPMG had self-reported certain matters relating to the review of the 2016 Carillion audit. The scope of the investigation was then expanded in July 2019 to include the Regenersis audit after KPMG had again self-reported.
