THE FRC has launched an investigation into KPMG’s auditing of the Co-op Bank, the troubled lender which last year discovered a £1.5bn black hole in its accounts.
The UK’s reporting watchdog is investigating the preparation, approval and audit of the Co-op Bank’s financial statements up to and including the year ended 31 December 2012.
As the bank’s auditor, KPMG has faced criticism for failing to discover problems within the bank that led to a £1.5bn capital shortfall being revealed in June, as well as signing off its calamitous takeover of Britannia Building Society in 2009.
Earlier this month, the Bank of England’s regulation arm, the Prudential Regulatory Authority, and the City watchdog, the Financial Conduct Authority, launched enforcement investigations into the Co-op Bank.
The bank is also subject to an independent Treasury-commissioned inquiry which will look at the bank’s failed attempt to buy 631 branches from Lloyds Banking Group, and an internal review, led by Sir Christopher Kelly, into the circumstances surrounding the discovery of the £1.5bn shortfall.
“It is to be expected that this scrutiny should extend to the audit whilst recognising that the auditor is independent of the events which gave rise to the issues experienced by the bank,” KPMG said in a statement.
“As auditor to the bank we believe that we have provided, and continue to provide, robust audits which provide rigorous challenge to the judgements and disclosures proposed by the bank’s management.”
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Burnet is currently the head of KPMG’s Financial Services team in Scotland