KPMG LLP was fined £1.25 million ($1.56 million) by the U.K. audit watchdog over errors it made in its work on Luceco Plc's books in 2016.
An-ex KPMG employee, Stuart Smith, who was audit engagement partner for the Luceco audit, was also fined £50,000, the Financial Reporting Council said in a statement on Thursday. KPMG's sanction was discounted to £875,000 after admissions of the failure while Smith's was reduced to £35,000.
At the time of the audit failures, Luceco was the parent of a group of companies producing lighting products and wiring accessories, including a production and manufacturing company in China and two distribution companies in the U.K.
The audit errors were compounded by the fact that KPMG and Smith had been aware of failures in previous years concerning the accuracy of the cost of inventory — one of the eight breaches they admitted, the FRC said.
The world's top auditors have come under fire from regulators over some of the most high profile finance scandals in recent years from Greensill to Carillion Plc. PricewaterhouseCoopers LLP was fined £5.6 million ($7 million) last month over its 2017 and 2018 audit of Babcock International Group Plc.
"We are committed to dealing with, and learning from, our historical cases and regret that aspects of our 2016 audit of Luceco fell short of required standards," Cath Burnet, head of audit at KPMG U.K. said in an emailed statement. "We continue to invest significantly in training, controls and technology to improve quality and resilience in our audit practice."
