LONDON Reuters -- Britain's accounting watchdog said on Tuesday it fined KPMG 3.3 million pounds $4.16 million over the company's audit of Rolls-Royce more than a decade ago.
The fine is related to payments made by Rolls-Royce to agents in India and is one of the many penalties imposed on KPMG, one of the world's Big Four accountants, over its audit of the aero engine group.
The Financial Reporting Council FRC said it had initially imposed a fine of 4.5 million pounds on KPMG over payments to agents in India, but reduced it to 3.3 million pounds after admission of failures by KPMG.
In 2017, Rolls-Royce was fined almost 500 million pounds by Britain's Serious Fraud Office over payments to agents in India under a Deferred Prosecution Agreement.
The FRC said Anthony Sykes, KPMG's audit partner in Rolls-Royce's audit, 150,000 pounds, was reduced to 112,500 pounds for his admissions of failures.
The FRC said there were allegations of bribery and malpractice through the use of intermediaries and advisers in the defence field.
The external review of its policies on how it audits a company's compliance with laws and regulations will have to be paid by KPMG.
KPMG's UK chief executive, Jon Holt, said he was pleased to have concluded the historic matter and was sorry that parts of the audit did not meet the professional standards required.
In addition to resolving legacy cases, Holt said that we are investing heavily in training, controls and technology to improve quality and resilience in our audit practice.
The auditor admitted that it misled the watchdog during spot checks on Carillion and software firm Regenersis after the FRC asked an independent tribunal to approve a 14.4 million pound fine for KPMG.
Over the past year, KPMG has also received fines for its work with bed maker Silentnight, audits of convenience store chain Conviviality and Revolution Bars.
The FRC is investigating KPMG's audit of Carillion.