Accounting giant KPMG was fined 3.5 million pounds ($4.24 million) for misconduct over reports on Bank of New York Mellon Corp.
The Financial Reporting Council on Thursday said a partner, Richard Hinton, was also fined 75,000 pounds over 2011 client asset reports he had signed on behalf of KPMG. Both KPMG and Hinton got discounts for admitting the misconduct, the regulator said in an emailed statement. The KPMG penalty is a fraction of the 12.5 million pounds the FRC was seeking at a hearing in May.
The tribunal that levied the sanctions said that “the misconduct consisted of a failure to understand and to apply fundamental rules,” the FRC said, adding that the court further decided that “no dishonesty or recklessness was involved but the misconduct involved the misapplication of rules that…are of very great importance to the financial system.”
The fine brings the total amount of U.K. penalties the accounting firm has faced in 2019 to at least 13.5 million pounds amid widespread criticism of the industry. Lax audits by multiple accounting firms have been blamed for the failures of companies such as Carillion Plc and Patisserie Holdings PLC.
KPMG said that Thursday’s case relates to issues dating back to 2011 and that no client of BNY suffered any financial loss.
“We regret that aspects of our work did not meet the standards expected by our regulator,” KPMG said in a statement. “We have cooperated with the FRC over the last four years to bring this investigation to a close and we are committed to bringing these historical cases to a swift conclusion.”
The FRC, which is soon to be replaced after complaints about its weak oversight of the industry, said yesterday that it has levied record fines of 42.9 million pounds over the last year.
