KPMG in danger of being banned from bidding for government contracts
KPMG have been threatened by the government with a ban on bidding for public contracts if there are any more scandals at the Big Four consulting firm, according to reports.
The Cabinet Office issued its warning in a letter to KPMG, according to the Financial Times, which first reported the news.
The ominous letter, which warned of a “range of options” including barring the firm from public contracts, has reportedly created some alarm among the KPMG leadership.
Chief executive of the firm’s UK operations Jon Holt said he was taking the government’s points “very seriously”.
“I have been clear that it is my personal priority to deal with our legacy issues, take action and learn from them and we are fully engaging with the Cabinet Office to demonstrate the changes we have made and are making to our business,” he said.
The threat by the government hits the accounting giant where it hurts. Combined, the Big Four accounting firms enjoyed government contracts worth £1.2bn for the financial year to March 2021, according to data provider Tussell, and KPMG was the third-biggest winner of public sector contracts by value.
During the pandemic, KPMG was enlisted by the government for advice on the creation of the UK’s temporary “Nightingale” hospitals in response to an overflow of Covid-10 patients.
The news comes as KPMG has been handed a series of fines for misconduct in the last few years.
Last month it was reported by Financial News that the accounting giant could be confronted with a £15m legal claim from insurance outsourcer Quindell, now known as Watchstone, which has been preparing to file claims alleging that it suffered losses of up to £15m from KPMG’s 2013 audit.
The UK accounting watchdog denounced KPMG earlier this year for knowingly giving an “untruthful” defence over its conflict of interest in the 2011 sale of Silentnight, for which it was fined £13m.
The verdict of the Financial Reporting Council’s (FRC) disciplinary tribunal marked the first time ever that the body had found an accountancy to have been “untruthful” in its defence.