May 24, 2022
KPMG Fined £3.4 Million by UK Regulator Over 2010 Rolls-Royce Audit
The UK’s Financial Reporting Council fined KPMG and its partner Anthony Sykes over its 2010 audit of Rolls-Royce Group Plc, the latest in a long list of audit scandals surrounding the firm.
KPMG was ordered to pay £3.4 million ($4.3 million), reduced from an original fine of £4.5 million because the firm admitted its shortcomings, the Financial Reporting Council said Tuesday in a statement. An external independent expert will also assess the firm’s policies, guidance and procedures for audit work. Sykes must pay a sanction of £112,500, which was also reduced for admissions and early disposal from £150,000.
The FRC found that KPMG failed to address two sets of payments made by Rolls-Royce to agents in India. These payments were later part of a bribery and corruption case under which Rolls-Royce paid large fines.
KPMG, like other members of the so-called Big Four accounting firms, has been facing ongoing criticism over the quality of its work. The company is battling an accumulation of disciplinary action over its audits of Carillion Plc, including a £1.3 billion suit by its administrators. KPMG was fined more than £14 million earlier this month over misconduct on major work it carried out for Carillion and data services company Regenersis.
Read more: KPMG Sued for $1.8 Billion Over Negligent Carillion Audits
KPMG Chief Executive Officer Jon Holt said in a statement that he’s sorry the firm’s audits didn’t meet the professional standards required. The firm is now investing “significantly” in training, controls and technology to improve quality and resilience in its audit practice, he said.
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