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By Huw Jones
LONDON, Jan 19 (Reuters) - Britain's accounting watchdog on
Wednesday fined KPMG 4.3 million pounds ($5.85 million) for
audits of drinks store chain Conviviality, whose brands included
Bargain Booze and Wine Rack, before it went into administration
in 2018.
The Financial Reporting Council said KPMG, one of the
world's "Big Four" accounting firms, will also have to report to
the watchdog identifying the causes of the deficiencies in the
2017 audit, and the steps and remedial action which the firm has
taken.
In the latest in a string of sanctions from the FRC, the
KPMG's fine was reduced to 3 million pounds for admissions and
early settlement of the case, the FRC said.
KPMG audit partner Nicola Quayle was fined 110,000 pounds,
cut to 80,850 pounds for early settlement. She also received a
severe reprimand.
"I'm sorry that our work wasn't good enough in this
instance," said Jon Holt, chief executive of KPMG in Britain.
"I am committed to resolving, and learning from, our past
cases and this development marks another step forward in dealing
with these matters. We have fully cooperated with the FRC
throughout their investigation," Holt said.
Conviviality was listed in London in 2013 and grew rapidly
through a series of acquisitions, reporting significant
increases in revenue, profit and net assets.
But in early 2018, the company issued a series of trading
updates which resulted in its shares being suspended ahead of
the company going into administration, the FRC said.
Failings admitted by KPMG included not revising initial
assessments of the risks of a material misstatement following
information obtained during the 2017 audit, the watchdog said.
There was also a failure to obtain sufficient audit evidence
in relation to accrued franchise licence revenue.
"The audit failings in this case were serious, spanned
several significant areas of the financial statements," said
Claudia Mortimore, the FRC's deputy executive counsel.
KPMG is also facing a fine for misconduct https://www.reuters.com/business/uk-watchdog-fines-former-kpmg-accountant-misconduct-2022-01-18
in how FRC inspectors were misled during spot checks of audits
of builder Carillion and software company Regenersis.
KPMG was fined 13 million pounds https://www.reuters.com/article/us-nr3cpacf-nr3cpac-britain-kpmg-idTRNIKBN2F71WP
last year for holding a major conflict of interest when it
advised on the sale of British bed manufacturer Silentnight.
The FRC is also investigating KPMG's audit of Carillion in
the run-up to the builder going bust, which could result in
another fine.
($1 = 0.7353 pounds)
(Reporting by Huw Jones; editing by Jason Neely)