KPMG facing 6m pound fine from FRC over misconduct in audits

KPMG faces £6m in sanctions from the Financial Reporting Council after investigations revealed misconduct in audits and the enquiries made in a claims file review process.

Sanctions have been levied against KPMG, its partner Mark Taylor, former partner Anthony Hulse and Douglas Morgan a former director of Equity Syndicate Management Limited (ESML).

Mark Taylor was fined £100,000, severely reprimanded and agreed to the imposition of a requirement to have a second partner review his audits until the end of 2020.

Anthony Hulse on the other hand was fined £100,000 and received a severe reprimand.

Douglas Morgan was excluded from membership of the Chartered Institute of Management Accountants (CIMA) for two years.

An independent Tribunal made findings of misconduct following a hearing in December 2017 and sanctions were determined following a hearing in October 2018.

The findings relate to the preparation and audit of Lloyd’s Syndicate 218 Report and Accounts for 2007, 2008 and 2009.

The tribunal found that in both years insufficient enquiries were made regarding the claims file review process and warning signs of deterioration in the Syndicate’s claims reserves were not acted upon, and consequently there was insufficient evidence to provide an unqualified audit opinion.

The company has agreed to undertake an additional internal review and report to the FRC on certain aspects of its 2018 audits of insurance undertakings.