MP calls for FRC accounting body to investigate KPMG over HBOS
Britain’s accounting standards watchdog has made a “serious mistake” in refusing to open a formal investigation into accountancy firm KPMG over the way it checked the books of HBOS bank before it collapsed, a senior UK lawmaker said on Monday.
The Bank of England and the Financial Conduct Authority last month published their report into the failure of HBOS in 2008, blaming the lender’s management while also criticising the FCA’s predecessor, the Financial Services Authority.
HBOS, which traded under the brands Halifax and Bank of Scotland, had to be rescued in a government-engineered takeover by Lloyds (LLOY.L), which as a result subsequently needed a 20 billion-pound taxpayer bailout of its own.
Andrew Tyrie, chairman of parliament’s Treasury Committee, said on Monday he has asked the Financial Reporting Council (FRC), which polices accounting firms, to reconsider the need for an investigation into the auditing by KPMG of HBOS.
“In the course of the investigation (into HBOS) by the regulators the FRC was invited, but turned down, the opportunity to launch an investigation into HBOS’s auditor,” Tyrie said in a statement.
“That was a serious mistake. It is now essential, in the interests of public confidence, that the FRC get on with this investigation, and without delay,” Tyrie added.
The FRC should act quickly to “maintain its public and professional credibility”, Tyrie said in a letter to the FRC’s chief executive, Stephen Haddrill, which was made available to the media.
The FRC said it has received Tyrie’s letter and noted its contents but had nothing further to add.
The watchdog said last month it found no reasonable grounds to suspect misconduct in its review of HBOS audits at the time of the BoE and FCA investigation. It also said it would review the regulators’ final report to see if there was any new information.
KPMG has said that an FCA document in 2012 noted that the accounting firm had suggested to HBOS management it should take a more conservative approach to provisioning.
Tyrie’s call opens parliament’s review of the HBOS report.
Later on Monday his Treasury Committee is due to quiz Andrew Green, the independent lawyer who published a separate report on HBOS last month into whether regulators had done enough to hold senior management to account.
On Tuesday at 1000 GMT the committee is due to question Andrew Bailey, deputy governor of the Bank of England, and Brian Pomeroy, a non-executive board member of the FCA.
The FCA’s chairman, John Griffith-Jones, had to recuse himself from the BoE and FCA’s report into HBOS as he was head of KPMG in Britain when the audits under scrutiny were being done.
Source: REUTERS – MP calls for FRC accounting body to investigate KPMG over HBOS
