KPMG fined over Quindell audit

KPMG must pay a fine of £3.15 million for failures during its audit of Quindell.

The Financial Reporting Council (FRC) issued the fine and reprimanded KPMG and audit engagement partner William Smith following their admission of misconduct in relation to the audit of the financial statements of Quindell for the period ended 31 December 2013.

They have admitted that their conduct fell significantly short of acceptable standards and that they failed to act in accordance with professional competence principles and due care.

KPMG’s fine was discounted to £3.15 million from £4.5 million, while Smith was fined £84,000 instead of £120,000.

Quindell helped insurance companies with claims management and was once the highest valued stock on the AIM market.

But the company’s shares were suspended in 2015, amid a Financial Conduct Authority investigation into its accounts. A short selling campaign had questioned its financial stability.

KPMG said in a statement that the firm has updated its audit processes and procedures to address the areas of concern, and added that it regrets that certain aspects of its work for the year ended 31 December 2013 didn’t meet the required standards.

The FRC issued a £1 million fine to Arrandco Audit earlier this year for misconduct in its handling of the accounts of Quindell.

Arrandco, previously known as RSM Tenon Audit, failed to “exercise sufficient professional scepticism”. Audit engagement partner Jeremy Filley was also handed a fine of £80,000.

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Mark Dugdale