KPMG and one of its former partners were found to be “untruthful” during an independent tribunal’s investigation into the Big Four audit firm’s advisory role regarding the 2011 sale of mattress company Silentnight to U.S. private equity firm HIG Capital.

The report of the disciplinary tribunal was published Wednesday by the Financial Reporting Council (FRC), more than two months after the U.K. regulator ordered KPMG to pay a £13 million (U.S. $18 million) fine in the case. David Costley-Wood, the former head of KPMG Manchester Restructuring who retired earlier this year, was sanctioned £500,000 (U.S. $697,000) for his alleged lapses as an adviser to both HIG and Silentnight.

The finding of the tribunal that KPMG and Costley-Wood advanced an untruthful defense is a first, according to the FRC. At issue was Costley-Wood’s stated determination Silentnight faced a number of “burning platforms,” meaning its insolvency was inevitable. The FRC contended the determination was engineered by HIG with the assistance of Costley-Wood to aid the former’s acquisition of Silentnight.

The tribunal’s findings mirrored that stance, with the report stating “the nature of the defense advanced by Mr. Costley-Wood … was untruthful in that he did not believe that there was a burning platform throughout the material period. … Had he admitted that the only burning platform was that created as a result of HIG acquiring the Silentnight debt, the course of the hearing might have been very different.”

Regarding the determination, the FRC stated, “[A]dvancing a defense which a respondent knows is untruthful seriously risks undermining the regulatory system, compounds the original failings, and may be treated as an aggravating factor to sanctions.”

Other deficiencies alleged in the tribunal’s report include KPMG’s failure to cooperate with the FRC executive counsel’s probe and lack of an investigation into Costley-Wood after receiving regulator warning notices that his involvement with HIG represented a conflict of interest. Among the allegations regarding the former, KPMG did not aid the FRC in determining Costley-Wood had falsified crucial meeting notes a year after the event took place.

Further, “KPMG failed to conduct an electronic search of Mr. Costley-Wood’s personal emails, despite two specific requests from Executive Counsel,” according to the FRC. “KPMG instead relied on Mr. Costley-Wood’s recollection of events over 9 years earlier.”

“KPMG and Mr. Costley-Wood compounded their serious misconduct by advancing a defense to proceedings which was partly untruthful and by failing to cooperate with the investigation,” said FRC Executive Counsel Elizabeth Barrett in a press release. “This ruling contains important learnings for members and member firms, both in relation to the original misconduct and in relation to the conduct expected once an investigation has been commenced.”

The fines of £13 million and £500,000 imposed on KPMG and Costley-Wood, respectively, are the highest ever against a member firm and member in a non-audit case, the FRC noted.

KPMG response: “This report makes difficult reading,” said KPMG UK Chief Executive Jon Holt in a statement. “We accept the findings of the tribunal, and we regret that the professional standards we expect of our partners were not met in this case and that it has taken over a decade to reach this point.

“We no longer provide insolvency services, and we have improved our broader controls and processes significantly since this work was performed in 2010. We will reflect on the tribunal’s findings carefully and ensure that we learn lessons to reinforce our focus on building trust and delivering work of the highest quality.”