London (Reuters) – Britain’s accounting watchdog said on Tuesday that it has fined KPMG 3.3 million pounds ($4.16 million) for its audit of Rolls-Royce (OTC: RYCEY) more than a decade ago.
The fine is for payments that Rolls-Royce made to agents in India. It is the latest in a series of fines that KPMG, one of the “Big Four” accounting firms in the world, has had to pay because of its audit of the aero-engine group.
The Financial Reporting Council (FRC) said that it had originally fined KPMG 4.5 million pounds for the payments to agents in India. However, after KPMG admitted that it had made mistakes, the fine was cut to 3.3 million pounds.
Under a deferred prosecution agreement, Britain’s Serious Fraud Office fined Rolls-Royce almost 500 million pounds in 2017 for paying agents in India.
The FRC said that KPMG’s audit partner on the Rolls-Royce audit, Anthony Sykes, was fined 112,500 pounds because he admitted to failing.
The FRC said allegations of bribery and wrongdoing in the defense field through the use of middlemen and “advisors” were common at the time of the audit.
KPMG will also have to pay for an outside review of how it audits a company’s adherence to laws and rules.
Jon Holt, the head of KPMG in the UK, said that he was glad that this “historic matter” was over and that he was sorry that some parts of the audit did not meet professional standards.
Holt said, “In addition to resolving old cases, we are also spending a lot of money on training, controls, and technology to make our audit practice better and more reliable.”
The FRC asked an independent tribunal last week to fine KPMG 14.4 million pounds because the auditor had admitted to lying to the watchdog during spot checks of audits of Carillion and Regenersis.
In the past year, KPMG has also been fined for its work with bed maker Silentnight and its audits of convenience store chains Conviviality and Revolution Bars.
The FRC is also looking into the audit of Carillion by KPMG.
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