Sanctions against KPMG LLP and Nick Plumb
News types: Investigations
Published: 12 June 2025
Executive Counsel to the Financial Reporting Council (FRC) has issued a Final Settlement Decision Notice (FSDN) under the Audit Enforcement Procedure against KPMG LLP (KPMG) and Nick Plumb (audit engagement partner) and imposed Sanctions as a result of the investigation into the Statutory Audit of the financial statements of Carr’s Group plc (Carr’s) for the financial year ended 28 August 2021 (FY21).
This Press Notice concerns the outcome of an investigation into the relevant Statutory Audit Firm and Statutory Auditor*. It would not be fair to treat any part of this announcement as constituting or evidencing an investigation into, or findings in respect of the conduct of, any other persons or entities.
Mr Plumb and KPMG breached the FRC’s 2019 Ethical Standard (the Ethical Standard) and International Standards on Auditing (ISAs) by failing to ensure compliance with applicable independence requirements. The independence issue arose because the Statutory Audit of Carr’s relied on the work of another firm (a component auditor outside the KPMG network, Firm X) who undertook the Statutory Audit of an associate of Carr’s, in circumstances where the audit engagement partner at Firm X had held the role for longer than five years, and Firm X had provided certain non-audit services to the associate entity.
The FSDN does not call into question the quality of the substantive audit work conducted either by KPMG or Firm X. The breaches were not dishonest, intentional, or reckless. KPMG and Mr Plumb provided an exceptional level of cooperation during the investigation, including by self-reporting breaches of Relevant Requirements and volunteering relevant additional information. This conduct attracted a 15% discount in addition to the discount for admissions and early disposal.
The following sanctions were imposed:
KPMG:
A financial Sanction of £1.25m, discounted for admissions, early disposal and exceptional cooperation to £690,625, and non-financial Sanctions comprising:
- A published statement in the form of a severe reprimand;
- A declaration that the audit report signed on behalf of KPMG did not satisfy the Relevant Requirements; and
- A requirement that KPMG review a representative sample of Statutory Audits involving component auditors outside KPMG’s network and report to its FRC supervisor on whether compliance with the independence requirements in the Ethical Standard has been achieved.
Nick Plumb:
A financial Sanction of £70,000, discounted for admissions, early disposal and exceptional cooperation to £38,675, and non-financial Sanctions comprising:
- A published statement in the form of a severe reprimand; and
- A declaration that the audit report signed by Mr Plumb did not satisfy the Relevant Requirements.
KPMG has also paid the costs of Executive Counsel’s investigation.
Carr’s is the parent company of a corporate group operating in the agriculture and engineering sectors. In FY21 it was listed on the main market of the London Stock Exchange and was a Public Interest Entity (PIE).
The FY21 financial statements of Carr’s were prepared as group financial statements and incorporated the financial results of subsidiaries, joint ventures and associates of Carr’s. In FY21, Carr’s Billington Agriculture (Operations) Limited (CBAO) was one such associate. The financial statements of CBAO were audited by a component auditor outside the KPMG network, Firm X.
For the purposes of the Statutory Audit of Carr’s, KPMG and Mr Plumb relied on the work of Firm X. KPMG and Mr Plumb should not have done so for two reasons. First, because Firm X’s audit engagement partner had held that role for more than five years. Secondly, because Firm X provided to CBAO certain tax and accountancy services. KPMG and Mr Plumb should not have signed the Carr’s audit report while placing reliance on the work of Firm X**.
As explained in the FSDN, the relevant paragraphs of the FRC Ethical Standard are: i) 3.10 (Key Audit Partner participation); 5.71 (tax services); and 5.120(a) (accounting services).
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. It is of fundamental importance therefore that when seeking to rely on the work of a component auditor, the group audit firm can be satisfied that its independence is not compromised as a result of conditions that would compromise the independence of another firm on whose work it relies.
In this case, whilst the quality of the audit work performed by the two firms is not brought into question, the breaches were serious. KPMG and Mr Plumb missed a number of opportunities in FY21 to establish the facts underpinning the breaches. The breaches in the current case involve the failure to identify bright-line prohibitions designed to secure the independence of the Statutory Auditor. The Respondents’ failings in this regard were of a basic and fundamental nature."
Read the Final Settlement Decision Notice.
*Capitalised and italicised terms in this press notice refer to terms defined in the FRC’s Audit Enforcement Procedure
**As explained in the FSDN, the relevant paragraphs of the FRC Ethical Standard are: i) 3.10 (Key Audit Partner participation); 5.71 (tax services); and 5.120(a) (accounting services).