KPMG fined in UK for Bargain Booze audits

"The audit failings in this case were serious [and] spanned several significant areas of the financial statements," said the FRC's deputy executive counsel.

KPMG is also facing a fine for misconduct in how FRC inspectors were misled during spot checks of audits of builder Carillion and software company Regenersis

Britain's accounting watchdog has fined KPMG £3m (€3.6m) for audits of drinks store chain Conviviality, whose brands included Bargain Booze and Wine Rack, before it went into administration in 2018.

The Financial Reporting Council (FRC) said KPMG, one of the world's 'Big Four' accounting firms, will also have to report to the watchdog identifying the causes of the deficiencies in the 2017 audit, and the steps and remedial action which the firm has taken.

KPMG's fine was reduced from £4.3m (€5.1m) to £3m for admissions and early settlement of the case, the FRC said.

Conviviality was listed in London in 2013 and grew rapidly through a series of acquisitions, reporting significant increases in revenue, profit, and net assets.

But in early 2018, the company issued a series of trading updates which resulted in its shares being suspended ahead of the company going into administration, the FRC said.

Failings admitted by KPMG included not revising initial assessments of the risks of a material misstatement following information obtained during the 2017 audit, the watchdog said.

There was also a failure to obtain sufficient audit evidence in relation to accrued franchise licence revenue.

"The audit failings in this case were serious [and] spanned several significant areas of the financial statements," said Claudia Mortimore, the FRC's deputy executive counsel.

KPMG is also facing a fine for misconduct in how FRC inspectors were misled during spot checks of audits of builder Carillion and software company Regenersis.

Reuters