News November 2014 KPMG Audit Plc, a Member Firm of the ICAEW, Mr Greg Watts, a partner of KPMG LLP, the parent of KPMG

KPMG Audit Plc, a Member Firm of the ICAEW, Mr Greg Watts, a partner of KPMG LLP, the parent of KPMG Audit Plc, and a Member of the ICAEW

04 November 2014


A disciplinary hearing of the Formal Complaint against KPMG Audit PLC, a Member Firm of the ICAEW and Mr Greg Watts, a Member of the ICAEW, regarding breaches of the Ethical Standards for Auditors in relation to KPMG’s audit of the financial statements of Pendragon PLC, a listed audit client of the firm, is listed to be heard on 5th December 2014 at 10.15am for one day.  The hearing relates to the investigation notified in the FRC notice (PN048) of 9th May 2013. The Formal Complaint is admitted and the purpose of the hearing is to determine the appropriate sanctions. The hearing will take place at The International Dispute Resolution Centre Limited, 70 Fleet Street, London EC4Y 1EU.

Notes to Editors:

  1. The Formal Complaint admitted does not affect the independence of the audit of Pendragon PLC’s financial statements for the years ended 31 December 2010 and 2011 or any other period.  

  2. The FRC is responsible for promoting high quality corporate governance and reporting to foster investment.  We set the UK Corporate Governance and Stewardship Codes as well as UK standards for accounting, auditing and actuarial work.  We represent UK interests in international standard-setting.  We also monitor and take action to promote the quality of corporate reporting and auditing.  We operate independent disciplinary arrangements for accountants and actuaries; and oversee the regulatory activities of the accountancy and actuarial professional bodies.

  3. In relation to disciplinary matters, the FRC is the independent, investigative and disciplinary body for accountants and actuaries in the UK dealing with cases which raise important issues affecting the public interest. In brief, the stages of the disciplinary process are:

    • Decision to investigate

    • Investigation

    • Decision whether to bring disciplinary proceedings against Member Firm or Member and, if so decided, referral to Disciplinary Tribunal

    • Tribunal hearing

    • Determination and imposition of sanction and/or costs orders

    The FRC can start a disciplinary investigation in one of two ways: (i) the professional bodies can refer cases to the FRC; and (ii) the FRC may decide of its own accord to investigate a matter. The Conduct Committee will consider each case identified or referred to it and decide whether or not the criteria for an investigation are met.

    Investigations are conducted by Executive Counsel and the Professional Discipline team within the Conduct Division. If disciplinary proceedings are commenced, Executive Counsel delivers a complaint to the Conduct Committee. The Conduct Committee then instructs the Convener to appoint a Disciplinary Tribunal. 

  4. Disciplinary complaints filed following an investigation are heard by an independent Tribunal which will normally sit in public. If the Tribunal upholds a complaint, there is a wide range of sanctions which it can impose including an unlimited fine, exclusion from membership of a professional body covered by one of the Schemes and withdrawal of practising certificates or licences.