KPMG fined £5m over Co-operative Bank audit
International accountancy firm KPMG has been ‘severely reprimanded’ and fined £5m after the company admitted misconduct over its 2009 audit of Co-operative Bank.
The Financial Reporting Council has today stated that KPMG questionable auditing followed Co-operative Bank’s merger with building society Britannia.
KPMG failed to tell the Co-operative Bank that some of the loans it acquired through the Britannia merger were too risky and failed “to obtain sufficient appropriate audit evidence”, according to the FRC. The company will now pay in excess of £4m, after agreeing to a settlement.
A KPMG spokesperson said: “We note the FRC’s announcement regarding our audit of the Co-op Bank for the year ended 31 December 2009. We regret that some of our audit work around specific elements of the Bank’s Fair Value Adjustments did not meet the appropriate standards.
“The work in question was conducted almost a decade ago and we have significantly enhanced our procedures and training around the areas in question since then.”
This is KPMG’s second fine in the last few months, after they were reprimanded £6m following their audit of insurance company Syndicate 218 last year.