FRC imposes non-financial sanctions against KPMG

FRC imposes non-financial sanctions against KPMG

The Financial Reporting Council (FRC) ) has issued imposed non-financial sanctions on KPMG in relation to the statutory audits of the financial statements of Foresight 4 VCT plc.

The sanctions have been imposed for the KPMG’s audits of the company for the 2012/2013, 2013/2014 and 2014/2015 financial years.

KPMG admitted shortcomings in its audits of figures relating to the company’s distributable reserves. These failings may have led to misstatements relating to distributable reserves in the Company’s financial statements, which were later restated in 2016 and 2018.

The sanctions arrive just weeks after the watchdog launched an investigation into KPMG and PwC’s audits of Eddie Stobart Logistics plc. This investigation concerns their audits of the firm before trading in the company’s shares was suspended in the summer of 2019.

In response, KPMG has received a reprimand from the watchdog and have been ordered to monitor compliance with revised audit procedures on company capital and distributions, and report on this to the FRC’s Executive Counsel.

The FRC’s executive counsel’s determination as to sanctions reflects that KPMG has taken steps to improve its audit procedures on distributions and noted that the breaches of relevant requirements were not intentional.

The counsel also determined that the sanctions were appropriate because there is no suggestion that there were insufficient distributable reserves to cover distributions made by the Company and the misstated figures for the Foresight 4 VCT did not affect the company’s profits or net asset value.

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