KPMG faces tribunal over Independent Insurance
JDS lays formal complaints against Big Four firm over auditing of collapsed insurance group
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