- KPMG faces record fine
- Carillion audit lapses
- Regulatory overhaul in progress
KPMG, one of the “big four” audit firms, is on the verge of incurring a record-breaking fine, expected to range between £20 million and £30 million, following serious lapses in its audit of Carillion, the construction giant that collapsed in 2018, causing massive job losses.
The Financial Reporting Council (FRC) and KPMG have entered the final stages of their discussions, with an official announcement expected in the near future. This significant financial penalty, initially discussed at £25 million to £30 million, will be adjusted downward due to KPMG’s cooperation during the investigation.
It’s worth noting that these figures are subject to potential revisions, but the looming fine marks a significant development in KPMG’s accountability for its role in one of the UK’s most high-profile corporate collapses.
The collapse of Carillion triggered widespread criticism of the company’s management and advisors and spurred calls for substantial reforms in the auditing profession. The fallout from this disaster has also seen former board members facing bans and fines.
KPMG already received a substantial fine of £14.4 million from the FRC for misleading during an audit check related to Carillion. Additionally, the firm, along with the Official Receiver, reached an undisclosed settlement for a £1.3 billion claim brought by Carillion’s creditors, alleging audit-related negligence.
While KPMG awaits the FRC’s verdict, the audit sector struggles with unimplemented reforms. The government’s plans include replacing the FRC with the Audit, Reporting and Governance Authority (ARGA), signaling a major transformation in regulatory oversight