. KPMG's most recent fine comes just two months){kind=link}
The Financial Reporting Council has fined KPMG £3 million over misconduct in its audits of the retailer Ted Baker (LON: TED).
KPMG’s most recent fine comes just two months after the group was given criticized by the FRC over an “unacceptable” decline in the quality of the group’s audit work.
The FRC said that the move “led to the loss of KPMG’s independence in respect of the audits.”
“In addition, there was a self-interest threat arising from the fact that the fees for the expert engagement significantly exceeded the audit fees in the relevant years.”
Because KPMG settled, the fine was reduced from £3 million down to £2.1 million, however, the group will also have to pay £112,000 worth of costs on behalf of the FRC’s executive counsel.
KPMG partner Michael Barradell has also been fined £80,000.
A spokesperson from KPMG said it is “committed to upholding the highest standards of independence” and regretted “that in this instance our processes fell short of the standards that we expect of our firm”.
“We welcome the FRC making clear that they do not allege a lack of integrity or objectivity on KPMG’s part and we note that our audit opinions on Ted Baker’s financial statements have not been called into question.”
KPMG has received high levels of criticism this year over its handling of Carillion’s accounts before the construction group’s collapse.
In 2013, the group was fined £4.5 million over its audit of Quindell.
Claudia Mortimore, an interim executive counsel at the FRC, said: “Ethical standards are critical in supporting the confidence that third-party users can reasonably have in financial statements in circumstances where, of necessity, they only have incomplete information to judge whether the auditor is in fact objective.”
“Where those standards are breached such that the auditor’s independence is lost, user confidence is likely to be undermined; the FRC makes clear by these sanctions the seriousness with which such breaches and their consequences are viewed.”