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KPMG faces investigation over Co-op Bank auditing

The Financial Reporting Council has launched an investigation into KPMG’s auditing of the Co-operative Bank.

The FRC, the disciplinary body for accountants and actuaries in the UK, will investigate the preparation, approval and audit of the financial statements of the Co-op Bank, up to the year ended 31 December 2012.

The Co-op Bank was forced to withdraw a bid to buy 632 Lloyds Banking Group last year when it discovered a £1.5bn capital black hole.

Earlier this month the FCA and Prudential Regulation Authority announced they are launching enforcement investigations into the Co-op Bank.

The Co-op Bank is also subject to an internal review, an independent Treasury-commissioned inquiry and a Treasury select committee inquiry into the failed Lloyds’ branches bid.

There is also a police investigation into former Co-op Bank chair Reverend Paul Flowers over drug allegations last year.

In December partners at KPMG were grilled by Treasury select committee MPs over KPMG’s role in the Co-op’s takeover of Britannia Building Society and its financial troubles.

Following the FRC investigation, the body will decide whether to bring disciplinary proceedings and if so will refer the matter to a disciplinary tribunal, which can impose sanctions and costs orders.

A spokeswoman for KPMG says: “Given the issues which the bank has experienced in recent months and in the light of the high media profile and public interest associated with these issues, it is understandable that there should be appropriate regulatory scrutiny.

“As auditor to the bank we believe that we have provided, and continue to provide, robust audits which provide rigorous challenge to the judgments and disclosures proposed by the bank’s management.

“We look forward to co-operating fully with the FRC and other regulatory authorities in their investigations.”

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  1. It is interesting that the main press is not picking up on this story, as if you really examine all of the banking and major scandals in the last 10 years, it all comes down to the auditors and accountants.

    Not one individual within the big four has been prosecuted or disciplined for malpractice.

    Should the big four accountancy practices be broken up – HELL YES.

    The big financial institutions and auditors club needs to be broken up and a free market introduced and more importantly individuals held to account.

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