UK: Junior KPMG auditor ‘should have questioned’ manager’s instructions, tribunal says
Sep 27, 2022
A 25-year-old junior KPMG auditor, who copied meeting minutes into a document as part of a scheme to deceive the UK’s Financial Reporting Council (FRC), “should have questioned” his manager’s instructions, a disciplinary tribunal has said.
Junior accountant Pratik Paw, who was asked to forge documents by his superiors during an FRC inspection of KPMG’s Carillion audit, “acted without the integrity required of an accountant and became a party to the deliberate misleading of the Audit Quality Review (AQR),” the FRC tribunal said.
The tribunal said that the instructions to copy meeting minutes into an old document “would have raised questions in anyone’s mind” as it rejected the junior accountant’s claims that he simply followed his manager’s instructions “without thought”.
The disciplinary tribunal said Paw is “an intelligent man” who should have questioned his superiors, as it claimed there “was no other conceivable reason” to backdate the meeting minutes apart from to falsely represent them to the FRC as contemporaneous notes.
Paw avoided being fined in July after the FRC previously recommended the junior auditor should be fined £50,000 over his role in misleading the watchdog during its 2017 inspection of KPMG’s audit of collapsed construction giant Carillion.
The junior auditor – who had net yet qualified as an accountant – was instead severely reprimanded as the FRC said that while he had not acted dishonestly, he had acted without integrity.
The tribunal noted that the “ambitious” junior accountant had initially volunteered to help out with the review of KPMG’s Carillion audit, before being instructed to copy the meeting notes by his manager Alistair Wright.
The findings come after KPMG was fined a record £14.4m and ordered to pay £3.95m in costs over the efforts to mislead the FRC.
The FRC also fined former KPMG partner Peter Meehan £250,000, and three of the Big Four accounting firm’s other executives – Alistair Wright, Richard Kitchen, and Adam Bennett – sums of £45,000, £30,000, and £40,000 each.
The tribunal noted the FRC became aware of the misconduct after KPMG reported itself to the watchdog, as it said the allegations may have never come to light if not for accounting firm’s decision to self-report.
“We believe that is only because KPMG made those reports to the FRC that these allegations have come to light,” the tribunal said.