FRC fines KPMG £700,000 for poor audit

The FRC has fined KPMG UK £700,000 and reprimanded KPMG UK’s former senior partner for Manchester, Nicola Quayle for a “failure to apply sufficient professional scepticism” in the audit of an unnamed company in the financial year 2015/16.

The £700,000 fine was discounted to £450,000 for early settlement, while Quayle also saw her fine of £45,000 reduced to £29,250.

Claudia Mortimore, deputy executive counsel to the FRC, said: “This is a measured and proportionate package of sanctions, which balances on the one hand the limited nature of the breaches, which did not call into question the truth or fairness of the financial statements, with the fact that auditors should have been on alert to pay particular attention to these types of complex supplier arrangements. Professional scepticism remains at the core of an auditor’s duty and the FRC will take appropriate action where it has been lacking, as in this case.”

While the decision notice said that the FRC does not question the “truth or fairness of the company’s FY2016 financial statements,” the seriousness of the breaches was aggravated by the fact that “both KPMG and Ms Quayle have poor recent regulatory records”.

KPMG UK did say in a statement: “We regret that specific aspects of our audit of this company for the 2015/2016 financial year did not meet the required standards.

“As the FRC makes clear, there is no question as to the truth and fairness of the financial statements. Audit quality is of paramount importance to our firm and we have updated our audit processes and procedures to address the areas of concern.”