KPMG fined £1.25m for Carr’s Group audit breaches
June 12, 2025
KPMG has been fined £1.25m by the Financial Reporting Council (FRC) over serious breaches of audit independence rules during its 2021 audit of farm and machinery supplier Carr’s Group.
The regulator found that KPMG and its audit engagement partner, Nick Plumb, relied on the work of another audit firm that lacked sufficient independence, in breach of the FRC’s 2019 Ethical Standard and International Standards on Auditing.
The unnamed firm audited an associate of Carr’s Group and had longstanding ties to the company, including providing non-audit services. Its lead audit partner had held the role for more than five years—exceeding the permitted time limit and raising clear concerns about objectivity.
The FRC said that while the substantive audit work was not called into question and the failings were not dishonest or intentional, the breaches were nonetheless “serious”.
Jamie Symington, FRC deputy executive counsel, said: “A fundamental objective of any audit engagement is that the intended users trust and have confidence that the audit opinion is professionally sound and objective.
KPMG and Plumb missed a number of opportunities in FY21 to establish the facts underpinning the breaches. The respondents’ failings were of a basic and fundamental nature.”
KPMG was ordered to pay a financial penalty of £1.25m, reduced to £690,625 for early settlement and cooperation. Plumb was also fined £70,000, reduced to £38,675.
The FRC acknowledged that both KPMG and Plumb had cooperated fully during the investigation, including self-reporting the breaches and providing additional evidence.
KPMG has since been instructed to review a sample of audits involving component auditors outside of its network to ensure future compliance with independence requirements.
The breach is the latest in a string of regulatory sanctions for the Big Four firm, which remains the most penalised audit firm by the FRC in terms of financial sanctions.
Cath Burnet, Head of Audit at KPMG UK, said: “We accept that we did not meet the required standards in this instance.
We cooperated fully with the FRC’s investigation, undertook remedial measures to address the findings, and are committed to driving continuous improvements in our audit practice.”
The penalty underscores the continuing pressure on audit firms to ensure strict compliance with independence rules, especially where non-network firms are involved in component audit work.
While the FRC did not find evidence of audit quality failures in this case, it reaffirmed that maintaining the appearance and reality of independence is a cornerstone of public trust in audit.
[Accountancy Age]
