KPMG to pay multimillion-dollar fine for Rolls-Royce audit failures

KPMG to pay multimillion-dollar fine for Rolls-Royce audit failures

The UK-based multinational audit and advisory firm KPMG has been sanctioned by the British Financial Reporting Council (FRC) with a fine of £4.5 million (€5.3 million at the current exchange rate), for failing to audit the group. Rolls-Royce in 2010.

In a statement issued today, Tuesday, the Supreme Council of the Revolution, its Portuguese counterpart CMVM – Comissão do Mercado de Valores Mobiliários, revealed that it had imposed a fine of 4.5 million pounds, reduced, in effect, to 3.37 million pounds (3.98 million euros). , due to KPMG’s admission of guilt in the process.

KPMG’s partner in charge of the audit area, Anthony Sykes, was also sanctioned with a fine of 150,000 pounds, reduced to 112,500 in actual terms.

At stake is an investigation launched in 2017 by the FRC board of directors into KPMG’s conduct in Rolls-Royce Group audits between 2010 and 2013.

In the statement now issued, the Supreme Audit Board notes that no audit failures were detected in relation to the 2011 to 2013 accounts. However, there were problems with respect to the 2010 fiscal year audit.

The problems relate to payments made by Rolls-Royce to brokers in India, which led to the British manufacturer being accused of bribery and corruption by the Serious Fraud Office, culminating in Rolls-Royce paying heavy fines.

“KPMG was aware of these practices,” notes the FRC, accusing the auditor of “gross failures” in terms of its duty of professional skepticism to obtain sufficient and appropriate information and documentation for the firm’s audit.

However, in the specific case, the FRC’s Board of Directors acknowledges that there has been no material change in Rolls-Royce’s accounts due to the failures now sanctioned by KPMG.

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“It is essential that auditors are alert to the risks of non-compliance with rules and regulations by companies, and that they conduct their work in this area with sufficient enthusiasm and professional skepticism,” said Claudia Mortimer, Executive Director of the FRC.

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