The UK Financial Reporting Council (FRC) has announced an investigation into the auditors of insurance technology provider Quindell Plc, for financial years 2012, 2013 and first half of 2014.
According to Quindell Plc’s annual reports and financial statements, RSM Tenon Audit Limited was its auditor before KPMG took over in October 2013. A FRC spokesperson told International Accounting Bulletin that the UK watchdog was not in a position to confirm or deny the names of the firms under investigation.
The FRC said in a statement it had "launched an investigation under the accountancy scheme into members and two members firms in relation to the preparation, approval and audit of Quindell’s financial statements for the period ended 31 December 2011 to the year ended 31 December 2013, and for the preparation and approval of the company’s interim results for the half year ended 30 June 2014."
RSM Tenon was acquired by Baker Tilly UK (Baker Tilly) in 2013, a few months before Baker Tilly left the Baker Tilly International network to join RSM International.
A spokesperson for Baker Tilly told International Accounting Bulletin: "As this matter is currently under inquiry by the FRC, it would be professionally inappropriate to comment on these or other aspects at the present time."
In a statement, KMPG said: "With respect to the FRC investigation announced today, it is understandable and appropriate that the FRC has decided to investigate the matter given the issues the company has faced. We were appointed auditor in October 2013 and, as noted in Quindell’s annual report issued today, subsequently have worked with management, the audit committee and, more recently, the FRC to resolve various accounting matters. We issued an audit opinion on the 2013 statutory accounts which included a number of restatements."
The firm has today issued a qualified audit opinion on the 2014 statutory accounts which include various further restatements, the statement continued. "Both to apply more conservative accounting policies in some areas and to correct prior year errors, largely in relation to certain historical acquisitions, revenue and share transactions and disclosures in respect of 2011 to 2013."
KPMG will co-operate fully with the FRC in its investigation, the statement concluded.