A 25-year-old junior KPMG auditor, who copied meeting minutes into a document as part of a scheme to deceive the UK’s Financial Reporting Council (FRC), “should have questioned instructions from his manager, a disciplinary tribunal heard.
Junior accountant Pratik Paw, who was asked by his superiors to falsify documents during an FRC inspection of KPMG’s Carillion audit, ‘acted without the integrity required of an accountant and became party to the deliberate deception audit quality review (AQR),” the FRC tribunal said.
The court said instructions to copy meeting minutes into an old document ‘would have raised questions in anyone’s mind’ as it dismissed the junior accountant’s claims that he had simply followed the instructions from his manager “without thinking”.
The disciplinary court said Paw was ‘a smart man’ who should have questioned his superiors, as he claimed there was ‘no other conceivable reason’ for backdating the minutes of the meeting other than misrepresenting them to the FRC as contemporary notes.
Paw avoided a fine in July after the FRC previously recommended that the junior auditor be fined £50,000 for his role in deceiving the watchdog during his 2017 inspection of the audit by KPMG of collapsed construction giant Carillion.
The junior auditor – who was not yet qualified as an accountant – was instead severely reprimanded as the FRC said that if he had not acted dishonestly, he had acted without integrity.
The court noted that the “ambitious” junior accountant initially volunteered to help review KPMG’s Carillion audit, before being tasked with copying meeting notes by his manager Alistair Wright.
The findings come after KPMG was fined a record £14.4m and ordered to pay £3.95m in costs for efforts to deceive the FRC.
The FRC also fined former KPMG partner Peter Meehan and three of the other Big Four accountancy firm executives – Alistair Wright, Richard Kitchen and Adam Bennett – £45,000, £30,000 and £40,000 each.
The court noted that the FRC became aware of the misconduct after KPMG reported itself to the watchdog, as it said the allegations may never have come to light were it not for the decision of the accounting firm to declare itself.
“We believe that it was only because KPMG made these reports to the FRC that these allegations came to light,” the court said.