(adds more detail, KPMG comments)
LONDON, October 13 (Businesshala) – KPMG has made a “false” defense seeking to reduce the fine imposed for conflicts of interest during the sale of British bedding maker SilentNite in 2011, Britain’s accounting watchdog said on Wednesday. .
A conflict of interest was found when KPMG, one of the world’s so-called Big Four accounting firms, acted as advisor to both Silentnight and US private equity company HIG Capital, which had sought to buy the British firm.
In August, the Financial Reporting Council (FRC) said it fined KPMG 13 million pounds ($17.7 million), the most ever on an accounting firm in a non-audit case, while a partner, David Costley-Wood, was fined 500,000. Pound was fined.
At an independent tribunal in June, KPMG sought a fine of more than £5 million.
On Wednesday, the FRC published the tribunal’s report on how it determined the level of fines and the case in general.
“For the first time, the tribunal has held that a defendant has made a false defense,” the FRC said in a statement.
It said that the defendants were entitled to defend themselves, but said that advancing a defense which a defendant knew to be untrue risked undermining the regulatory system and mitigating core failures.
KPMG said the report made “hard reading” and said it accepted the findings and regretted that the matter did not meet the professional standards expected of its partners.
“We no longer provide insolvency services and we have significantly improved our comprehensive controls and procedures since this was done in 2010,” said Joe Holt, chief executive of KPMG UK, in a statement.
“We will consider the tribunal’s findings carefully and make sure we learn lessons in building trust and keeping our focus on delivering work of the highest quality,” Holt said.
KPMG is also being investigated by the FRC for its role in auditing the collapsed builder Carillion, and any fines from the case are also likely to be hefty.