News November 2018 Formal Complaint delivered against KPMG and David Costley-Wood, relating to Silentnight

Formal Complaint delivered against KPMG and David Costley-Wood, relating to Silentnight

22 November 2018
The Financial Reporting Council’s (FRC) Executive Counsel has delivered a disciplinary Formal Complaint, under the Accountancy Scheme, against KPMG LLP and one of its partners, David Costley-Wood (the Respondents), a member firm and member respectively of the ICAEW.

The alleged Misconduct relates to an engagement carried out by the Respondents between January 2011 and April 2011 relating to companies trading under the name “Silentnight”.

The Formal Complaint alleges that:
  1. KPMG and Mr Costley-Wood accepted and performed an engagement for Silentnight in circumstances where their professional judgment was compromised (or was likely to be compromised) and their objectivity was impaired (or was likely to be impaired), contrary to the Fundamental Principle of Objectivity in the ICAEW Code of Ethics (Code);
  2. KPMG and Mr Costley-Wood knowingly or recklessly assisted with the provision of untrue and/or misleading and/or materially incomplete explanations to the Pension Protection Fund (PPF), the Pensions Regulator, Silentnight and the trustees of the Silentnight Pension Scheme in relation to Silentnight, in breach of the Fundamental Principle of Integrity in the Code.
A Disciplinary Tribunal will be convened to hear the Formal Complaint and determine whether the Respondents have committed Misconduct. A hearing date will be announced in due course.

The FRC’s investigation was opened in October 2015 following a referral from the Pensions Regulator. A Proposed Formal Complaint was served on the Respondents in March 2018.

Notes to editors:
  1. The FRC’s mission is to promote transparency and integrity in business.  The FRC sets the UK Corporate Governance and Stewardship Codes and UK standards for accounting and actuarial work; monitors and takes action to promote the quality of corporate reporting; and operates independent enforcement arrangements for accountants and actuaries. As the competent authority for audit in the UK the FRC sets auditing and ethical standards and monitors and enforces audit quality.
  2. 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 under the Accountancy Scheme are:
  • Decision to investigate
  • Investigation
  • Decision whether to bring enforcement 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
Under the Accountancy Scheme 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.

The criteria are specified in paragraph 5(1) of the Accountancy Scheme. A Member or Member Firm shall be liable to investigation under this Scheme only where, in the opinion of the Conduct Committee the matter raises or appears to raise important issues affecting the public interest in the United Kingdom and there are reasonable grounds to suspect that there may have been Misconduct or it appears that the Member or Member Firm has failed to comply with any of his or its obligations under paragraphs 14(1) or 14(2) of the Scheme.
Investigations are conducted by Executive Counsel and the Enforcement division.
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