KPMG fined £21m over Carillion audit scandal

KPMG LLP was fined a total of £21 million ($25.9 million) over its failings in the audit of defunct construction and facilities management firm Carillion by the UK’s watchdog.

The Financial Reporting Council said Thursday that the number of errors in the reporting were “exceptional”  and “failed to adhere to the most basic and fundamental audit concepts.”

Carillion’s collapse was one of the biggest corporate casualties in British history. It fell into liquidation in 2018 after the UK government refused to bail it out, costing almost 3 000 jobs and leaving 30 000 suppliers and subcontractors with £2 billion in unpaid bills.

The firm audited the financial statements of KPMG for three years through 2016 and in each of the years, it provided unqualified opinion that the disclosures gave a true and fair view of Carillion’s affairs, FRC said. In 2017, Carillion announced expected provisions totaling about £1.5 billion, primarily arising from expected losses on a number of its contracts.

“These findings are damning,” Jon Holt, chief executive officer of KPMG in the UK, said. “It is clear to me that our audit work on Carillion was very bad, over an extended period.”

The FRC also sanctioned two former partners of the firm.

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