By Samuel Bankole
The United Kingdom Financial Reporting Council (FRC) has imposed a £13.5 million fine on KPMG LLP and its former partner David Costley-Wood for misconduct and the failure of the advisory firm to act solely in its client’s interests.
“The Financial Reporting Council (“FRC”) today announces sanctions against KPMG LLP (KPMG) and David Costley-Wood, formerly a partner and Head of KPMG Manchester Restructuring.
“This follows a referral from The Pensions Regulator and an investigation undertaken pursuant to the Accountancy Scheme* in relation to Mr Costley-Wood’s conduct in respect of the Silentnight group of companies in the period August 2010 to April 2011,” FRC said in a statement posted on it website.
The regulator, which also severely reprimanded KPMG said an independent Disciplinary Tribunal made findings of Misconduct against the firm.
The regulator ordered KPMG to conduct a Root Cause Review to establish:why threats to compliance with the fundamental principle of objectivity were not appropriately identified and safeguarded in the period prior to the appointment of office holders in the Silentnight matter; and in a sample of past cases, whether threats to compliance with the fundamental principle of objectivity were appropriately identified and safeguarded in the period prior to the appointment of office holders and if not, the reasons for such failures.
Conduct a review of various policies, procedures and training programmes relating to various of KPMG’s advisory services practices in the light of the results of the Root Cause Review.
KPMG former partner, Costley-Wood was fined £500,000 and severaly reprimanded while he was also excluded from membership of the Institute of Chartered Accountants in England and Wales (ICAEW) for a period of 13 year and precluded from holding an insolvency licence for the same period.
Last month, FRC had knocked KPMG LLP over the quality of its banking audits, with U.K.’s industry regulator said it was “unacceptable” that for the third year running the accounting firm’s work wasn’t up to scratch.
“Overall Inspection results at KPMG did not improve and it is unacceptable that, for the third year running, the FRC found improvements were required to KPMG’s audits of banks and similar entities,” FRC said in itts annual report in July.