Huw Jones

LONDON, (Reuters) – Britain’s accounting regulator said Tuesday that KPMG’s former employee and KPMG admitted to misconduct in spot checks they conducted on a 2015 audit of Regenersis software company.

Financial Reporting Council (FRC), stated that Stuart Smith had admitted to misleading inspectors of the watchdog and that his conduct was against his ICAEW professional accountant body’s code.

“KPMG has admitted that Mr Smith’s conduct amounted to misconduct, and that the firm is liable to be sanctioned in this respect,” the FRC said in a statement.

Smith was fined 150,000 Pounds ($203,745) by the watchdog and prohibited from practicing as an accountant for three consecutive years.

According to the FRC, sanctions against KPMG would be decided at the end of an ongoing tribunal hearing regarding checks on auditors Regenersis or Carillion.

FRC has accused five former KPMG employees, among others, of forging documents missing from inspections.

Smith was due to also contest the accusations at the hearing but settled just before the proceedings started last week.

According to the watchdog, “KPMG has agreed that it will be liable for costs and other expenses relating the KPMG investigation, enforcement proceedings and settlement with respect to Mr Smith.”

KPMG already admitted last week that misconduct occurred in handling the FRC’s spot check of Carillion and Regenersis audits. KPMG claimed it self-reported the FRC to them after an internal investigation.

Jon Holt (CEO of KPMG UK) said that he is very sorry about the misconduct and is determined to prevent it from happening again.

($1 = 0.7362 pounds)