KPMG faces tribunal over Independent Insurance

KPMG is set to face a tribunal over its auditing of Independent Insurance, the collapsed insurance group, after the Joint Disciplinary Scheme formally laid complaints today.

Executive counsel Chris Dickson said he was laying complaints against the firm and against KPMG partner Andrew Sayers.

The firm audited the group between 1986 and its collapse, and signed off Independent’s last company accounts in 2000. IIG collapsed in June 2000 with ‘unquantifiable losses’ arising from reinsurance contracts that were highly unfavourable to the company against a background of rising insurance claims.

There were allegations at the time that losses from insurance claims at the company were not entered into the accounting system. Dickson has also looked into the conduct of Dennis Lomas, the company’s former FD, but no complaints have been laid as yet.

PricewaterhouseCoopers, IIG’s liquidators, also launched a lawsuit against KPMG for more than £300m alleging that the firm failed to notice discrepancies in the accounts between December 1997 and December 2000, a case that is understood to have been settled.

KPMG said in a statement: ‘We note that the JDS executive counsel has decided to lay complaints against KPMG and one of our partners. We have cooperated fully with the JDS throughout the course of a very long investigation and will continue to do so.’

A Joint Disciplinary scheme tribunal has the power to impose heavy fines and ban accountants from practising.

Further reading:

Audit quality: a dangerous path

Management briefing: Audit choice