KPMG has admitted to misleading the regulators during audits of Carillion, an outsourcer which collapsed in 2018.
A hearing spearheaded by the Financial Reporting Council (FRC) kicked off yesterday to determine whether KPMG is guilty of forging documents and misleading regulators in relation to audits of Carillion and Regenersis.
The accounting giant’s chief executive, Jon Holt, apologised for the firm’s behaviour ahead of the collapse of Carillion, which was given a clean bill of health by auditors despite struggling under a burden of £7bn in debts at the start of 2018.
“It is clear to me that misconduct has occurred and that our regulator was misled,” said Holt.
“The misconduct that this tribunal will hear about over the coming weeks is disturbing and upsetting for me and for my colleagues,” he added. “It is unacceptable, we do not tolerate or condone it in any way, and I am very sorry that it occurred in our firm.”
The misconduct was self reported to the FRC by KPMG. At the start of the hearing, expected to go on for five weeks, lawyers for the FRC said that KPGM had forced documents to show regulators ahead of routine inspections of Regenersis and Carillion accounts.
KPMG is already facing a hit to its reputation over the sale of bed manufacturer Silentnight to a private equity firm. The Big Four firm was fined £13m by the UK accounting watchdog earlier this year for knowingly giving an “untruthful” defence over its conflict of interest in the 2011 sale.