A formal complaint has been filed against KPMG, its current and former staff by the accounting regulator for allegedly submitting false information as part of audit inspections of the bankrupt company Carillion and Regenersis.
The Financial Reporting Council (FRC) said the disciplinary complaint alleged that KPMG and several individuals provided false and misleading information and documents to the watchdog when it conducted a review of two audits.
One of the audits was for failed outsourcing giant Carillion and the other was a 2014 audit of then-tech group Regenersis, according to the FRC.
It came under increasing pressure on KPMG over the quality of its audits after being fined nearly £13 million a few weeks ago for selling bedmaker Silent Night to a private equity firm in 2011.
The FRC tribunal ruled that one of KPMG’s partners helped client Silent Night into insolvency, allowing HIG Capital to buy the company out of administration.
The individuals to whom the formal complaint has been made in the latest case include Peter Meehan, the engagement partner for the Carillion audit, and Stuart Smith, the engagement partner for the Regenersis audit.
The FRC said the complaint did not allege that the audits had been performed incorrectly or that the financial statements had not been prepared properly.
A disciplinary court will review the formal complaint case and a hearing will begin on January 10.
The 2016 audit of Carillion’s financial statements was examined in separate ongoing investigations, with KPMG facing a potentially hefty fine when the FRC investigation is completed in the coming months.
KPMG and other Big Four accounting firms were in the process of divesting their restructuring arm in an effort to avoid conflicts of interest in its business.
It came in the wake of an anticipated government move that would force them to split their audit departments from the rest of the company to ensure they remain independent after the demise of Carillion and other major corporate bankruptcies.