KPMG fined £4.3m for ‘serious failings’ in Conviviality audit
KPMG has been fined £4.3m for failures during its audit of the Bargain Booze owner Conviviality and severely reprimanded in the latest blow to its reputation.
The accounting regulator, the Financial Reporting Council (FRC), found “a serious lack of competence” in KPMG’s 2017 audit of the company, which collapsed within nine months of the accounts being signed off.
The KPMG partner in charge of the audit, Nicola Quayle, was also fined £110,000 and given a severe reprimand. Quayle, who previously led KPMG’s Manchester office and sat on its UK board, will pay £80,850, after receiving a discount for admitting the failures.
Conviviality was the owner of brands including Wine Rack and the high-end wine retailer Bibendum, and it also distributed drinks to major hospitality chains including JD Wetherspoon, Yates and Slug and Lettuce.
It was worth £500m and had 4,000 staff in March 2018, but by early April it had collapsed into administration after investors realised that its series of acquisitions had left it overextended.
It is the latest in a string of audit scandals for KPMG. It has also admitted misconduct over its audit of Carillion, the government contractor that went bust in 2018.
A disciplinary tribunal heard on Tuesday that the partner leading that audit was deliberately trying to portray himself as negligent to avoid a charge of misconduct, according to counsel for another member of the audit team. The partner denied the allegation and denies misconduct.
KPMG also received a near-record fine of £13m for misconduct in August related to a conflict of interest in the sale of the bed company Silentnight to a private equity firm.
The FRC said “KPMG should have been more professionally sceptical” of Conviviality’s claims to have
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