Advertisement
UK markets close in 4 hours 57 minutes
  • FTSE 100

    7,704.90
    -17.65 (-0.23%)
     
  • FTSE 250

    19,430.49
    -56.04 (-0.29%)
     
  • AIM

    735.37
    -1.26 (-0.17%)
     
  • GBP/EUR

    1.1699
    -0.0005 (-0.04%)
     
  • GBP/USD

    1.2691
    -0.0038 (-0.30%)
     
  • Bitcoin GBP

    49,356.10
    -4,507.71 (-8.37%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • S&P 500

    5,149.42
    +32.33 (+0.63%)
     
  • DOW

    38,790.43
    +75.63 (+0.20%)
     
  • CRUDE OIL

    82.69
    -0.03 (-0.04%)
     
  • GOLD FUTURES

    2,157.90
    -6.40 (-0.30%)
     
  • NIKKEI 225

    40,003.60
    +263.20 (+0.66%)
     
  • HANG SENG

    16,529.48
    -207.62 (-1.24%)
     
  • DAX

    17,939.72
    +7.04 (+0.04%)
     
  • CAC 40

    8,164.09
    +15.95 (+0.20%)
     

KPMG fined 700,000 pounds for failing to challenge client

FILE PHOTO: The KPMG logo is seen at their offices at Canary Wharf financial district in London

By Huw Jones

LONDON (Reuters) - Britain's accounting watchdog fined KPMG and a senior partner on Thursday for failing to challenge what a client was telling them about certain complex supplier arrangements.

The Financial Reporting Council, which did not name the company being audited, said KPMG's fine was discounted from 700,000 pounds ($868,840.00) to 455,000 pounds for early settlement. Senior partner Nicola Quayle was fined 45,000 pounds, reduced to 29,250 pounds for early settlement.

KPMG and the other big accounting firms are facing major reforms to improve standards after company collapses at British builder Carillion and retailer BHS.

ADVERTISEMENT

Policymakers also want to put an end to what they consider cosy relationships between auditing firms and their clients and bring in more competition.

KPMG, one of the world's top four accounting firms, in 2018 was put under "increased scrutiny" by the FRC for poor auditing.

In the latest case, the watchdog said KPMG failed to obtain and document sufficient audit evidence in relation to supplier-funded rebates. 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," said Claudia Mortimore, the FRC's deputy executive counsel.

But the FRC said the breaches were limited in nature and did not call into question the truth or fairness of the company's financial statements.

KPMG said it regretted that specific aspects of its audit of the company in question for the 2015/16 financial year did not meet the required standards and has updated procedures.

"As the FRC makes clear, there is no question as to the truth and fairness of the financial statements," KPMG said in a statement.

The FRC said KPMG was also required to undertake a quality performance review of three audits for which Quayle is the auditor and report the results to the watchdog.

Quayle, an auditor for 23 years and a former non-executive board member of KPMG UK, will also be required to "undertake appropriate training, in a format to be agreed with the FRC", the watchdog said.

(Reporting by Huw Jones. Editing by Jane Merriman)