KPMG hit with £4.5m fine over Quindell audit
KPMG has been fined £4.5m by the accountancy watchdog over its audit of insurance firm Quindell.
The Financial Reporting Council said it has also ordered KPMG’S audit engagement partner, William Smith, to pay £120,000.
KPMG’S fine was discounted for settlement to £3.15m and Mr Smith’s knocked down to £84,000.
It follows an admission of misconduct in relation to the audit of the financial statements of Quindell for the period ended December 31 2013, the FRC said.
Quindell, now Watchstone, was rocked by a series of scandals in 2015 and was also investigated by the Serious Fraud Office.
Its shares surged between 2012 and early 2014 — valuing it at £2.7bn — but stock then plunged amid short-selling and after a US hedge fund publicly questioned the firm’s business model. Its shares were later suspended after the Financial Conduct Authority launched a probe into its accounts and founder Rob Terry.
The FRC said: “The misconduct related to two audit areas and included failure to obtain reasonable assurance financial statements were free from material misstatement, failure to obtain sufficient appropriate audit evidence and failure to exercise sufficient professional scepticism.”