The KPMG partner who led the audit of failed outsourcer Carillion has been banned from the accounting profession for a decade for providing false and misleading information to regulators.
Peter Meehan will also have to pay a fine of £250,000 after a Financial Reporting Council (FRC) tribunal found that he and other KPMG managers had misled the regulator using forged documents.
Carillion collapsed in January 2018, resulting in 3,000 job losses and rigorous scrutiny of the accounting profession amid accusations that auditors had failed to spot deep financial problems.
However, the disqualifications related not to the audit itself, but to information provided to regulators when they were carrying out an investigation. A tribunal in January heard detailed evidence of the forged documents including meeting minutes and retroactively edited spreadsheets.
The FRC also banned three other managers on the Carillion audit from membership of the profession. Alistair Wright and Adam Bennett will be banned for eight years and will pay fines of £45,000 and £40,000 respectively. Richard Kitchen will be banned for seven years and fined £30,000. Meehan and the other managers were found to have acted “dishonestly”.
KPMG had already admitted that misconduct had occurred and that it had misled regulators at the start of the tribunal, agreeing to pay a £14.4m fine – one of the largest in audit history – that was decided in May. KPMG also paid costs of £4m for the tribunal.
All of the individuals on the Carillion audit strongly denied misconduct, but the tribunal quickly descended into recriminations as they sought to blame each other for the misleading information.
Elizabeth Barrett, the FRC’s executive counsel, said: “Misconduct that deliberately undermines the FRC’s ability to monitor and inspect the effectiveness of audits is extremely serious because it obstructs the FRC’s ability to protect the public interest.
“This case underlines the need for all professional accountants, regardless of seniority, to be aware of their individual responsibility to act honestly and with integrity in all areas of their work.”
Pratik Paw, the most junior member of the team to face the tribunal, received a severe reprimand but no other punishment. He was not found to have acted dishonestly.