KPMG has apologised for misconduct and misleading the UK’s accounting regulator after former auditors were accused of “forgery” related to audits including that of Carillion, the major government contractor that collapsed four years ago. Jon Holt, the chief executive of KPMG UK, said it was “clear” that misconduct had occurred, in a statement published to mark the start of a disciplinary tribunal on Monday. The Financial Reporting Council (FRC) has alleged that KPMG misled its investigators over routine inspections of the audits of Carillion and the sofware company Regenersis, in 2016 and 2014 respectively. The FRC has alleged that “relevant individuals acted with a lack of integrity in dishonestly or recklessly misleading the regulator”, according to tribunal documents. The tribunal on Monday heard via a public video call a number of allegations of “forgery” by KPMG’s auditors, including the “fabrication” of documents. The FRC’s counsel, Mark Ellison, told the tribunal that auditors manufactured spreadsheets and minutes of meetings to appear as if they were created during the audits, when in fact they were created months later, and then presented as genuine to inspectors. Carillion collapsed in January 2018, resulting in 3,000 job losses and causing chaos across the 450 public sector projects in which its services were used. The collapse of the company, which had £7bn of debt, turned into one of the highest-profile accounting scandals in recent years. Parliamentary committees have said KPMG was “complicit” in Carillion’s “questionable” accounting practices, including “complacently signing off its directors’ increasingly fantastical figures”. However, the tribunal will not investigate the circumstances of Carillion’s collapse. KPMG reported the alleged misconduct to the regulator, although it remains a party to the disciplinary tribunal alongside former partners and employees. The other respondents have denied allegations of misconduct. Holt said: “It is of course for the tribunal to reach a conclusion on the allegations as they relate to the individuals concerned. Nevertheless, it is clear to me that misconduct has occurred and that our regulator was misled.” Holt said the alleged misconduct was “disturbing and upsetting for me and for my colleagues” and was “a violation of our processes and clearly against our values”. “It is unacceptable, we do not tolerate or condone it in any way, and I am very sorry that it occurred in our firm,” he said. The tribunal is expected to hear evidence over the course of several weeks from the FRC, KPMG and the individual respondents. They included Peter Meehan, who was KPMG’s lead partner on the Carillion audit, and Stuart Smith, the lead partner on the Regenersis audit. Lawyers for Meehan and Smith did not respond to requests for comment. If the tribunal finds that wrongdoing has occurred it has the power to impose unlimited financial sanctions on firms or individuals. It also has the power to ban people from the audit profession. Alistair Wright, a KPMG group senior manager, denied allegations of misconduct relating to Regenersis, in a summary of his position sent by his lawyers. He admitted “dishonest” conduct in relation to Carillion because he intended “to increase the risk that the […] inspection team would be misled” on when documents had been created, but denied the allegation that the content of the minutes was false or misleading. Richard Kitchen, who was an audit manager of Carillion, strongly denied the allegations of misconduct. He said via his lawyer that he welcomes the opportunity to give his account to the tribunal. Adam Bennett, a former senior manager, denied all allegations of misconduct against him via his lawyer. Pratik Paw, an assistant manager, strongly denied all of the allegations against him.