{"id":3741,"date":"2020-05-26T14:19:31","date_gmt":"2020-05-26T14:19:31","guid":{"rendered":"https:\/\/sloane.co.uk\/finance\/blog-post\/financial-reporting-blog-post\/kpmg-fined-for-lacking-professional-scepticism-in-audit-failure\/"},"modified":"2020-06-10T14:49:21","modified_gmt":"2020-06-10T14:49:21","slug":"kpmg-fined-for-lacking-professional-scepticism-in-audit-failure","status":"publish","type":"post","link":"https:\/\/sloane.co.uk\/finance\/blog-post\/financial-reporting-blog-post\/financial-reporting-financial-reporting-blog-post\/kpmg-fined-for-lacking-professional-scepticism-in-audit-failure\/","title":{"rendered":"KPMG fined for lacking professional scepticism in audit failure"},"content":{"rendered":"

KPMG fined for lacking professional scepticism in audit failure<\/p>\n<\/p>\n

\n

KPMG was reprimanded by the accounting watchdog and faced a financial sanction, which was discounted to \u00a3455,000 for admissions and early disposal, the FRC said in a statement on Thursday.<\/a><\/p>\n

Further punishment was handed to Nicola Quayle, who was a senior partner at KPMG Manchester with 23 years\u2019 auditing experience and was chair of KPMG\u2019s audit and risk committee from October 2014 to September 2017.<\/p>\n

Quayle was hit with a fine of \u00a345,000, which was also discounted for admissions and an early resolution. The former senior partner was left to pay \u00a329,250. In further punishment, Quayle also received a reprimand and must undertake appropriate training.<\/p>\n

Responding to the case, Claudia Mortimore, Deputy Executive Counsel to the FRC reiterated that \u201cprofessional scepticism remains at the core of an auditor\u2019s duty\u201d<\/strong>. <\/strong><\/p>\n

\u201cThis is a measured and proportionate package of sanctions, which balances on the one hand the limited nature of the breaches, which did not call into question the truth or fairness of the financial statements, with the fact that auditors should have been on alert to pay particular attention to these types of complex supplier arrangements.\u201d<\/p>\n

In a statement, KPMG said it regretted the specific aspects of its audit of the unnamed company that did not meet the required standards.<\/p>\n

The sanctions were based on Quayle\u2019s signing off the statutory audit of the financial statements of the unnamed company for the 2015\/16 financial year, despite the company reporting two distinct categories of supplier rebates, namely,\u00a0promotional income and overrider income.<\/p>\n

Her failures included not explaining on the FY2016 Audit file why the audit risk of promotional income differed from that relating to overrider income and failing to obtain, and document audit work conducted on promotional income balances and on the reconciliation of overrider income.<\/p>\n

As a result of the auditor\u2019s failings, Quayle won\u2019t undertake any statutory audits for two years. KPMG, meanwhile, has agreed to undertake a quality performance review of three statutory audits where Quayle served as the statutory auditor.<\/p>\n

KPMG has a long list of recent examples of poor disciplinary history. In recent years the Big Four firm has been hit with a \u00a35m fine for its audit of the Co-op bank<\/a>, a \u00a33m fine for the audit of Ted Baker, and a \u00a36m fine for the audits of Lloyd\u2019s Syndicate.<\/p>\n

Quayle also has poor regulatory record. She\u2019s already been the subject of four adverse audit quality reviews by the FRC between 2012 and 2016. For two of those reviews, Quayle was graded 2B which deemed her work \u201cacceptable overall with improvements required\u201d and the other two got the grade 3 \u201csignificant improvements required\u201d. The audit in this sanction was included in the latter of those grades.<\/p>\n<\/p><\/div>\n

\u00a0<\/p>\n

\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"

The FRC has issued KPMG with a \u00a3700,000 fine after a senior partner failed to apply sufficient professional scepticism in relation to another poor audit from the Big Four firm. <\/strong><\/p>\n","protected":false},"author":2,"featured_media":5723,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[23],"tags":[],"_links":{"self":[{"href":"https:\/\/sloane.co.uk\/wp-json\/wp\/v2\/posts\/3741"}],"collection":[{"href":"https:\/\/sloane.co.uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/sloane.co.uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/sloane.co.uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/sloane.co.uk\/wp-json\/wp\/v2\/comments?post=3741"}],"version-history":[{"count":0,"href":"https:\/\/sloane.co.uk\/wp-json\/wp\/v2\/posts\/3741\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/sloane.co.uk\/wp-json\/wp\/v2\/media\/5723"}],"wp:attachment":[{"href":"https:\/\/sloane.co.uk\/wp-json\/wp\/v2\/media?parent=3741"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/sloane.co.uk\/wp-json\/wp\/v2\/categories?post=3741"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/sloane.co.uk\/wp-json\/wp\/v2\/tags?post=3741"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}