KPMG will face a formal disciplinary hearing regarding information it provided about its auditing of the collapsed contractor Carillion.<\/p>\n
The Financial Reporting Council (FRC) said KPMG, one of its former partners and some of its current and former employees, provided \u201callegedly false and misleading information\u201d to the FRC as it investigated the accountant\u2019s auditing of Carillion and another company, Regenersis.<\/p>\n
One former employee named by the FRC is Peter Meehan, the auditor\u2019s engagement partner for the Carillion audit, who was suspended in January 2019<\/a> over allegations that data handed over to the FRC concerning Carillion had been manipulated. Meehan\u00a0gave evidence to the Carillion inquiry in February<\/a> 2018 when it was revealed the contractor\u2019s board had raised concerns about KPMG missing \u201csloppy accounting\u201d in its audit.<\/p>\n A disciplinary tribunal will be held in January where the FRC\u2019s case will be heard and it will be decided whether KPMG and any of its current or former staff committed misconduct.<\/p>\n The Unite union said the latest development shows the UK\u2019s financial regulator system needs \u201croot and branch reform\u201d as the system failed to \u201crespond to Carillion\u2019s collapse and to implement measures to prevent similar corporate failures in future\u201d.<\/p>\n Unite assistant general secretary Gail Cartmail said: \u201cIt is absolutely essential that workers are reassured that their employer is not playing fast and loose with their futures and their livelihoods are not at risk of disappearing overnight.\u201d<\/p>\n The FRC is still investigating the auditing of Carillion\u2019s accounts and previously suggested that it had found breaches in KPMG\u2019s audit<\/a>. The watchdog did not reveal the nature of the breaches at the time, but said it was looking at Carillion\u2019s accounting on its contracts, pension liabilities, goodwill and its going concern statement.<\/p>\n The FRC is expected to issue KPMG with its largest ever fine<\/a> when it reaches a settlement over the auditing investigations, with Sky News<\/em> claiming in March that it could be as large as \u00a325m.<\/p>\n Carillion\u2019s liquidator, Litigation Capital Management, said earlier this year that it had secured funding to pursue a \u00a3250m legal claim<\/a> against KPMG over the auditing of Carillion\u2019s financial statements. The claim is expected to be heard at the Commercial Court of the High Court.<\/p>\n