FRC inspecting Co-op Bank's 2012 accounts
Reporting watchdog confirms it is scrutinising the Co-Op Bank's financial reporting
BRITAIN’S REPORTING WATCHDOG is inspecting the 2012 accounts of the Co-operative Bank, but has yet to begin a formal investigation, it confirmed on Friday.
The FRC, which ordinarily only comments about investigations when they are formally announced, confirmed it was scrutinising the bank’s financial reporting following weeks of turmoil at the beleaguered lender.
“We are making enquiries into the Co-Op’s financial reporting in accordance with our normal procedures,” the FRC said in a statement.
News of the enquiry comes as the Co-op tries to secure approval from its bondholders for a radical restructuring of its banking division and follows the resignation of bank’s former chairman Paul Flowers in the wake of drug allegations.
In a prospectus issued to bondholders earlier this month as part of its restructuring plans, the Co-op revealed it had received enquiries from the conduct committee of the FRC in respect of its 2012 accounts.
“These enquiries relate to the disclosure in the 2012 annual report and accounts of the bank’s regulatory capital position. They also relate to the Bank’s loan impairment, impairment of its investment in its replacement banking IT platform, and to fair value disclosures,” the prospectus said.
KPMG, the bank’s auditors, previously raised concerns about the bank’s ability to continue as a going concern when it announced a pre-tax loss of £709m for the first half of 2013 and revealed a £1.5bn hole in its accounts.
As part of an independent into the events that led to the capital shortfall, Sir Christopher Kelly is investigating the role of KPMG as well as the bank’s management structures, culture, governance and accounting practices.
KPMG has said that audits of the Co-Op Group and Co-op Bank were robust and followed professional standards.