op Bank, faces extra checks on audits

Carillion

08/05/2019 07:58

(Adds detail, context)
    LONDON, May 8 (Reuters) - Accounting giant KPMG has been
fined and reprimanded by regulators over a defective audit of
Britain's Co-op Bank and its audits of lenders will face
additional checks for three years.
    Britain's Financial Reporting Council said KPMG had been
fined 5 million pounds ($6.54 million), discounted for a
settlement to 4 million pounds.
    KPMG audit partner Andrew Walker was also fined 125,000
pounds, discounted for settlement to 100,000 pounds, and
reprimanded.
    The penalties relate to a 2009 audit of the Co-op Bank
shortly after its ill-fated merger with the Britannia Building
Society, which pushed it to the brink of collapse.
    The penalties come at a difficult time for Britain's big
four accountancy firms - which also include PwC, Deloitte and EY
- with regulators calling on them to be broken up after a string
of auditing failures on major firms including BHS and Carillion.
    All KPMG's audit engagements with credit institutions for
audits ending in 2019, 2020 and 2021 will be subject to an
additional review by a separate KPMG audit quality team who will
provide reports to the FRC, the regulator said.
    KPMG will also pay 500,000 pounds towards the FRC's costs.
    The FRC said KPMG and Walker both admitted their conduct
fell significantly short of standards expected in assessing the
fair value of Britannia's loan book.
    The accountancy firm failed to obtain sufficient evidence
and to exercise sufficient professional scepticism and failed to
inform Co-op Bank the financial statements were not adequate. 
    KPMG was not immediately available for comment. 
    
($1 = 0.7649 pounds)

 (Reporting by Iain Withers; editing by Jason Neely and Louise
Heavens)
 ((Iain.Withers@thomsonreuters.com; +44(0)207 542 3330;))