Sat. Jan 22nd, 2022


The most junior member of the KPMG audit team accused of it forgery of documents to mislead regulators a tribunal heard he was investigating his job for British outsourcer Carillion was unaware he was doing something wrong.

Lawyers for Pratik Paw said the former KPMG employee also quoted the firm’s hierarchical structure and its minority ethnicity in its defense.

The claims were made on the third day of an industry tribunal over allegations by the Financial Reporting Board that Paw and five other senior KPMG colleagues had falsified documents following questions from his inspectors.

The auditors then passed on “manufactured” documents to give the impression that they were created during the audit of Carillion’s 2016 financial statements, it is alleged. The outsourcer collapsed in January 2018 with liabilities of £ 7 billion.

Lawyers for Paw, who denies injustice, said he was a 25-year-old junior employee and was not yet a qualified accountant at the time of the 2017 Carillion audit inspection.

Following questions from FRC inspectors, Paw was asked by colleagues to draw up minutes based on handwritten notes of meetings held by senior colleagues with overseas auditors, his lawyers said. A senior colleague later sent the minutes to the inspectors, the tribunal heard.

Scott Allen, Paw’s attorney, said his client did not attend the meetings but did not express concern because he was unaware that what he was being asked to do was wrong.

He received no training on FRC quality inspections and trusted his more senior colleagues, “which was an essential part of his training and hierarchy” of KPMG, Allen said.

Allen explained the context of Paw’s involvement in the alleged offense and said: “He points to his junior position in a very hierarchical structure and atmosphere. He points to his minority ethnicity within that hierarchical structure and atmosphere. ”

Allen compared Paw to “a very junior gear in a very fast-moving and complicated machine”.

Paw was also busy with other work and believed he was being asked to perform the tasks “quickly and without fuss,” Allen said.

These factors meant that the junior employee was “hyper-focused” on the task in front of him and therefore did not identify that he should challenge what he was asked to do, Allen said.

This followed submissions to the tribunal on Tuesday by KPMG’s lawyer James Brocklebank QC, who said that any offense was “the product of individual conduct” and that there “no systemic problem” at the firm. The accused auditors received training, but “no ethical training was needed to tell staff not to lie,” he added.

KPMG said the FRC had been misled by the auditors, who had all left the firm in the meantime.

The other defendants – Peter Meehan, the main partner about the Carillion audit, Alistair Wright, Richard Kitchen and Adam Bennett – also denied allegations of misconduct. Another auditor, Stuart Smith, has settled with the FRC.

The trial continues.



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