KPMG Nears Settlement With Audit Regulator Over Carillion Collapse | Economic news
The big four accounting firms KPMG are heading towards a financial settlement with regulators over its audit of Carillion, the doomed construction group, in the years leading up to its collapse.
Sky News has learned that KPMG responded to the Initial Investigation Report (IIR) given to it by the Financial Reporting Council (FRC) more than six months ago.
The company’s response is significant as it marks another step towards possible sanctions for its work on the Carillion books, which became insolvent in 2018 carrying over £ 5 billion in debt.
A final settlement is still likely to be in several months.
The FRC is set to impose a record fine on KPMG for Carillion audit-related failures.
That would mean it would exceed the £ 15million penalty imposed on Deloitte last year for its work on Autonomy, the software company whose takeover ultimately sparked a transatlantic extradition battle.
Industry sources predict that the FRC could ultimately fine KPMG of around £ 25million over the Carillion scandal, which has been widely cited as one of the catalysts for proposals released Thursday to revise audit frameworks and UK corporate governance.
A spokesperson for KPMG UK said: “We are fully cooperating with the FRC investigation. We have and will continue to respond appropriately to the initial investigation report.
A separate IIR produced by Carillion’s 2013 KPMG audit watchdog was delivered to the accounting firm last month.
The FRC declined to comment on Thursday.