Accounting firm to pay penalties

Accounting firm KPMG is required to pay a total penalty payment of £1.65 million, it has emerged.

The company has been fined in relation to its role as auditor for Independent Insurance, a company which ceased operations in 2001.

Independent Insurance's collapse was a consequence of accounting fraud.

"An auditor in good standing should not have placed such complete reliance on management representations," said the Joint Disciplinary Scheme, the organisation behind the investigation.

In response, KPMG added: "However ... there is clear evidence that information was withheld from us. KPMG has to an extent been one of many victims of that fraud."

As a result of the fraud, both the financial director and chief executive of Independent Insurance have been awarded custodial sentences.

The penalty payment awarded to the accounting firm was made up of a fine of £495,000, in addition to costs totalling £1.15 million.

KPMG has a history going back to 1987.