The FT reports this morning that:
The UK accountancy watchdog said on Tuesday it had fined KPMG a total of £390,000 for putting commercial considerations above ethical standards for auditors in two separate cases of misconduct that stretch back to 2010 and 2011.
The two cases were not minor. The first involved the Chief Operating Officer owning shares in an audit client, and the second KPMG auditing a company where a KPMG partner was a director.
A long time ago I worked for Peat Marwick Mitchell & Co - who donated their first two initials to KPMG. Back then everyone in the firm, from top to bottom, was in no doubt at all that holding any financial interest in any client was not allowed, and declarations were required to make sure it did not happen. And I was on a training contract for much of the time I was there.
These cases. in contrast, involve partners, one of them the Chief Operating Officer. And they got it badly wrong.
Now I accept people make mistakes. Of course they do. But this is an area where the rules were so clear no one could have made a mistake back in 1979 when I started my clear. And candidly, it's pretty inexcusable that such a mistake was made in 2010 and 11 when these incidents happened.
In that case the suggestion that the rules on ethical standards were ignored for commercial reasons does look to be damning, and also an appropriate explanation.
The sanction is a fine. The indication, as has been the case with bank fines, is that this is inappropriate. The implication of the finding is that there is an issue here that requires much more robust attention. I suspect that it will not be addressed. Like the banks, KPMG is ‘too bing to fail'. And we're all the poorer for it.
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At first I thought you had made a mistake in the addition of an ‘n’ in BIG. Upon consideration I realised the mistake was the failure to add a further letter, ‘l’ to make BLING.
Early morning typing accuracy is not always my thing
I would suggest that these two cases are likely to be the tip of an iceberg.
This doesn’t apply just apply to KPMG but includes the remainder of the “Big Four”.
Professionalism is sacrificed on the altar of commercialism.
Surely a major concern must be that all of the Big Four audit the Big Banks!
You mentioned “declarations were required to make sure it did not happen.” They still are required each year.
In which case the issue is much more serious
And penalties should have been much harder
I don’t suppose the offending partners actually lost their jobs and their certification over this?
no indication of it
As somneone who has passed through both KPMG and PWC, many years ago, it saddens me greatly that those firms have evolved into the predatory ventures they seem to have become today – or perhaps it’s just naive to have believed that they were ever anything else.
But more than that, I obect to sharing a professional body that seems to have no interest in those of us, and I suspect we are many, who have what I guess would now be described as an old-fashioned distaste for much of what the biggest firms do. Some of us, well this one anyway, just want to fulfill what you once described as our primary function, to help our clients sleep as well as they might.
Agreed Nick
Completely
In part as a man who still has some clients
Surprised that neither you nor FT actually read the tribunal findings of FRC. Makes interesting reading and sadly not as explosive as you both had assumed, but shows a failure in systems.
Your facts are not correct which may explain why you think sentence lenient. In all cases, responsible partners suffered financial loss at entity level. The partner who became a director of Pendragon had been retired well before he took the directorship and the person holding the shares in the client had been employed by the client and sold the shares at a loss within 4 months of joining.
Both you and FT should do a little better in future.
Respectfully, you entirely miss the point
The whole point was ethics came first and you put finances ahead