KPMG hit with record fine over Carillion audits

The Financial Reporting Council (FRC) has issued a record fine to KPMG under the Audit Enforcement Procedure, as well as imposing sanctions on two of the firm’s former audit partners.

Credit: KPMG

KPMG has been fined a total of £21.5m (split between KPMG LLP and KPMG Audit Plc) for its role in the collapse of support services giant Carillion. The fine was reduced by 30% in recognition of the company’s “co-operation and admissions”.

Meanwhile, former audit partners Peter Meehan and Darren Turner were sanctioned with £350,000 and £70,000 fines respectively and issued with severe reprimands. Meehan was also excluded from membership of the Institute of Chartered Accountants in England & Wales (ICAEW) for 10 years.

“The number, range, and seriousness of the deficiencies in the audits of Carillion during the period leading up to its failure was exceptional,” said FRC executive counsel, Elizabeth Barrett. “This is reflected in the financial sanction imposed on KPMG LLP, the highest ever imposed by the FRC.

“Many of the breaches involve failing to adhere to the most basic and fundamental audit concepts such as to act with professional scepticism and to obtain sufficient appropriate audit evidence.”

Earlier this month, former Carillion chief executive Richard Howson was disqualified as a director for eight years for his part in the company's collapse.