KPMG has been fined £3m by the UK accounting regulator for audit failings at collapsed alcohol retailer Conviviality, the second set of sanctions against the firm in as many days.
The Big Four firm failed to gather enough evidence to support its work or to apply sufficient professional scepticism during the audit of Conviviality’s accounts for the year to April 2017, the Financial Reporting Council found.
It also failed to document audit procedures properly or to revise its assessment of risks of material misstatement in the accounts as fresh information emerged, the regulator said.
Conviviality, the Aim-listed owner of Bargain Booze, entered administration in April 2018 after a failed attempt to raise fresh funds from investors.
KPMG also breached ethical rules by carrying out non-audit work during the period covered by the audit of the 2018 accounts, which is banned due to the risk of conflicts of interest.
The firm was issued a severe reprimand and ordered to report to the watchdog on the causes of the problems and on what steps it had taken to prevent a repeat.
Nicola Quayle, the partner who led the audit, was fined more than £80,000 and issued with a severe reprimand.
The fines for KPMG and Quayle were reduced from £4.3m and £110,000 respectively because they admitted the failings.
The sanctions followed an announcement on Wednesday that KPMG and another of its former auditors had settled with the FRC after he admitted to misleading the watchdog’s quality inspectors. The penalty against KPMG in that case will be decided at the end of a tribunal into allegations that five other auditors dishonestly misled the FRC during inspections of audits at outsourcers Regenersis and Carillion.
“I’m sorry that our work wasn’t good enough in this instance,” said Jon Holt, UK chief executive of KPMG. “I am committed to resolving, and learning from, our past cases and this development marks another step forward in dealing with these matters,” he added.
Quayle was contacted for comment through KPMG.