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The UK’s regulator of the accounting profession, the Financial Reporting Council (FRC), has again imposed a multimillion-dollar fine on the British company KPMG. In a review of car and engine manufacturer Rolls-Royce, the office has previously dropped large seams.
KPMG has been fined £ 3.4 million by the FRC for this, the British media included Financial Times† The initial fine of £ 4.5 million was reduced because the office cooperated with the investigation. However, KPMG still has to pay £ 726,000 in costs to FRC and the office is under additional assessment for compliance with laws and regulations. The auditing officer involved was also fined.
FRC criticism relates to its control over 2010; The supervisor also reviewed the 2011 and up to 2013 inspections, but found no violations in this regard. According to the FRC, KPMG did not properly respond to indications that Rolls-Royce did not comply with legal requirements for payment to agents in India when it reviewed its 2010 statistics.
The allegations came to light during a criminal investigation into the Rolls-Royce by the UK’s Great Fraud Office, which eventually led to a settlement with a luxury car manufacturer in 2017 of nearly £ 500 million.
Professional review is not enough
In FRC’s view, KPMG lacked professional suspicion and “prominent” allegations of bribery and Rolls-Royce misconduct were already in place during the audit. The auditor did not collect enough audit evidence and did not record enough in the Rolls-Royce audit file, according to FRC, which states that the company’s quality control was “not standard”.
It is the fourth major fine imposed on KPMG in the UK this year. Earlier this month, the company was fined millions for deliberately misleading the FRC about controlling a contractor who has now gone bankrupt.
Earlier this year, the British agency KPMG also agreed to be fined for failing to inspect the Conviviality beverage retailer and cuisine Revolution Bars. That brings the total KPMG fines in the UK this year to £ 21.7 million.