Settlement with KPMG LLP and Stuart Smith
18 January 2022
The Executive Counsel to the Financial Reporting Council (FRC) has agreed terms of settlement with KPMG and Stuart Smith following their admissions of Misconduct in relation to the FRC’s Audit Quality Review (AQR) inspection of the audit of the financial statements of Regenersis plc for the financial year ended 30 June 2014 (“Regenersis 2014 Audit”)*.
Mr Smith has admitted that he made, or was responsible for, representations to the FRC’s AQR inspectors which were misleading and that he was reckless as to whether those representations were misleading and whether the inspectors would be misled by them.
Mr Smith has admitted that his conduct in making or being responsible for the representations fell significantly short of the standards reasonably to be expected of a Member and was contrary to the ICAEW’s Code of Ethics Fundamental Principle of Integrity.
KPMG has admitted that Mr Smith’s conduct amounted to Misconduct, and that the firm is liable to be sanctioned in this respect.
Sanctions imposed on Mr Smith are as follows:
a. Exclusion from the ICAEW for a recommended period of three years; and
b. A financial sanction of £150,000
Sanctions for KPMG will be determined by the Disciplinary Tribunal following the conclusion of the ongoing hearing of the Formal Complaint (which is dealing with allegations that are not made against Mr Smith). The firm will also pay the FRC’s costs in respect of this Misconduct.
The terms of settlement have been agreed by the FRC’s Executive Counsel and approved by the Disciplinary Tribunal appointed to hear the Formal Complaint.
A link to the Settlement Agreement can be found here.
A copy of the re-amended Formal Complaint may be requested pursuant to the 11 January 2022 Ruling of the Disciplinary Tribunal.
Para. 18 of the Schemes Publication Policy states that the Conduct Committee will not normally publish the names of any Member whose conduct is under investigation. The Schemes Publication Policy does not apply this requirement to announcements relating to approved Settlement Agreements.
* The Executive Counsel made no allegations in respect of the quality of the Regenersis 2014 Audit and did not allege that the Regenersis plc financial statements were not properly prepared.