By Huw Jones
LONDON (Reuters) – Britain’s accounting watchdog said on Tuesday that KPMG and one of its former employees have admitted misconduct during the regulator’s spot checks on an audit of software company Regenersis in 2015.
The Financial Reporting Council (FRC) said Stuart Smith has admitted that he misled inspectors from the watchdog, and that his conduct was contrary to his ICAEW professional accounting body’s code of ethics.
“KPMG has admitted that Mr Smith’s conduct amounted to misconduct, and that the firm is liable to be sanctioned in this respect,” the FRC said in a statement.
The watchdog fined Smith 150,000 pounds ($203,745) and banned him from practising as an accountant for three years.
The FRC said sanctions on KPMG will be determined at the conclusion of an on-going tribunal hearing on checks on audits of Regenersis and builder Carillion.
Five other former KPMG employees are contesting FRC accusations of forging missing documents requested by the watchdog’s inspectors during the inspections.
Smith, who was also due to contest the allegations at the hearing, decided to settle just before proceedings began last week.
“KPMG agrees that it is liable for the costs of, and incidental to, the investigation, enforcement proceedings and settlement in respect of KPMG and Mr Smith,” the watchdog said.
KPMG had already admitted nL8N2TQ517 last week to misconduct in how the FRC was dealt with during spot checks of audits of Regenersis and Carillion, saying it had self-reported to the FRC after an internal investigation.
Jon Holt, CEO of KPMG UK, said last week he was very sorry for the misconduct and was determined to ensure it will never be repeated.
($1 = 0.7362 pounds)
(Reporting by Huw Jones; Editing by Emelia Sithole-Matarise)
