FRC fines KPMG 1.25 million pounds for Revolution Bars audit failures

LONDON (Reuters) -Britain’s Financial Reporting Council said on Tuesday it had fined accounting firm KPMG 1.25 million pounds ($1.64 million)for its part in the sub-standard auditing of Revolution Bars Group plc.

The KPMG fine has been adjusted to 875,000 pounds in view of undisclosed “aggravating and mitigating factors” and its co-operation with the investigation. KPMG will also pay the executive counsel’s costs.

The FRC said KPMG and its audit engagement partner Michael Neil Frankish, who left KPMG in 2016, accepted failures in their work related to supplier rebates, share-based payments, and deferred tax for the operator of premium bars which had only listed on the London Stock Exchange’s main market in 2015.

KPMG said it regrets that aspects of its 2015 and 2016 audits of Revolution Bars fell short of required standards and it is committed to dealing with, and learning from, its historic cases.

“We continue to invest significantly in our business, taking action to address the FRC’s findings and have made significant improvements… including in respect of supplier rebates, share based payments and deferred tax,” KPMG said.

In determining sanctions to be imposed, the FRC has taken into account that these were serious breaches but were not intentional, dishonest, deliberate or reckless.

The firm was sanctioned alongside Frankish, who was also fined 50,000 pounds, adjusted to 35,000 for aggravating and mitigating factors and discounted for co-operation with the FRC investigation.

Frankish had no comment.

The FRC has imposed several hefty fines on KPMG in recent years, though they could be dwarfed by any potential sanction for its audit of collapsed builder Carillion, which the watchdog has investigated but has yet to make public the outcome.

($1 = 0.7638 pounds)

(Reporting by Sinead Cruise and Huw Jones; editing by Carolyn Cohn, editing by Ed Osmond)