Accountancy KPMG has been hit with record collective fines of £21 million over its audits of collapsed builder Carillion.
According to the Financial Reporting Council (FRC), KPMG made a host of errors in audits of Carillion’s finances between 2014 and 2017 - one year prior to the firm’s collapse.
“The investigation was exceptionally complex and required the analysis of a very substantial volume of information and documents,” the council said.
“The resulting findings identify an unusually large number of breaches of relevant requirements.”
KPMG had received two collective fines worth £30 million, with these reduced by 30% respectively thanks to its cooperation with the investigation.
Former partner Peter Meehan was fined £350,000 separately by the FRC, meanwhile.
“KPMG and Mr Meehan failed to respond to numerous indicators that Carillion’s core operations were lossmaking and that it was reliant on short-term and unsustainable measures to support its cash flows,” the council added.
Carillion collapsed in 2018 with the loss of some 3,000 jobs. It had been involved in around 450 public sector projects at the time.
Insufficient evidence to prove KPMG’s audits were “true and fair”, alongside a lack of “professional scepticism”, saw it breach requirements, according to the FRC.
“Many of the breaches involve failing to adhere to the most basic and fundamental audit concepts,” FRC executive counsel Elizabeth Barrett added.