KPMG investigated over Co-op bank audits

 

KPMG is being investigated over its role as auditor to the troubled Co-operative Bank, which almost collapsed last year, and could face a massive fine

The Financial Reporting Council today launched an investigation into the “preparation, approval and audit” of Co-op Bank’s accounts up to 2012.

KPMG has audited the Co-op Group and the Bank for more than 30 years and also advised it on deals including the takeover of Britannia Building Society. Last year it collected £7.4 million in fees from the Co-op including £3.3 million for advising on its aborted purchase of the “Project Verde” bank branches from Lloyds Banking Group.

The FRC has taken, on average, about a year to complete such investigations which pave the way for a full Disciplinary Tribunal. The tribunal can, in turn, impose sanctions, fines and costs on the audit firm and individuals.

The largest fine imposed by the FRC was £14 million on Deloitte for its corporate finance work for MG Rover. That was ten times the next highest fine, which was against PwC for its work for JP Morgan Securities in London.

The audit partner for Co-op Bank for the past five years was Andrew Walker while Jonathan Hurst is audit partner for the group. Together with Warren Mead, the financial services, transactions and restructuring partner, they appeared before the Treasury Select Committee last December.

KPMG said today it would co-operate with the investigation but added: “As auditor to the bank we believe that we have provided, and continue to provide, robust audits which provide rigorous challenge to the judgements and disclosures proposed by the bank’s management.”

Meanwhile, Co-operative Group performed a U-turn today, saying it has halted plans to sell its general insurance business as part of the bail-out of its troubled bank.

Last March, before the arrival of new chief executive Euan Sutherland, Co-op said it would sell both its general and life insurance businesses as part of its plan to inject £1 billion of capital into the near-collapsed bank.

But after last month’s £1.5 billion refinancing of the bank, which saw hedge funds take control, Co-op Group needs to inject only £333 million. It has already raised £220 million of that through the sale of the life and savings business to Royal London.

The general insurance business has 1.4 million customers and made operating profits of £28 million in the first half of 2012, and Sutherland has decided it is better to keep it.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
News
ebooksNow available in paperback
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Sheridan Maine: Commercial Finance Manager

Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

Sheridan Maine: Regulatory Reporting Accountant

Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

Ashdown Group: Marketing Services Manager - (communications, testing, DM)

£32000 - £35000 per annum + benefits: Ashdown Group: Marketing Services Manage...

Guru Careers: Finance Account Manager

£Neg. (DOE) + Excellent Benefits: Guru Careers: A Finance Account Manager with...

Day In a Page

Homeless Veterans appeal: 'You look for someone who's an inspiration and try to be like them'

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Could cannabis oil reverse the effects of cancer?

Could cannabis oil reverse effects of cancer?

As a film following six patients receiving the controversial treatment is released, Kate Hilpern uncovers a very slippery issue
The Interview movie review: You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here

The Interview movie review

You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here
Serial mania has propelled podcasts into the cultural mainstream

How podcasts became mainstream

People have consumed gripping armchair investigation Serial with a relish typically reserved for box-set binges
Jesus Christ has become an unlikely pin-up for hipster marketing companies

Jesus Christ has become an unlikely pin-up

Kevin Lee Light, aka "Jesus", is the newest client of creative agency Mother while rival agency Anomaly has launched Sexy Jesus, depicting the Messiah in a series of Athena-style poses
Rosetta space mission voted most important scientific breakthrough of 2014

A memorable year for science – if not for mice

The most important scientific breakthroughs of 2014
Christmas cocktails to make you merry: From eggnog to Brown Betty and Rum Bumpo

Christmas cocktails to make you merry

Mulled wine is an essential seasonal treat. But now drinkers are rediscovering other traditional festive tipples. Angela Clutton raises a glass to Christmas cocktails
5 best activity trackers

Fitness technology: 5 best activity trackers

Up the ante in your regimen and change the habits of a lifetime with this wearable tech
Paul Scholes column: It's a little-known fact, but I have played one of the seven dwarves

Paul Scholes column

It's a little-known fact, but I have played one of the seven dwarves
Fifa's travelling circus once again steals limelight from real stars

Fifa's travelling circus once again steals limelight from real stars

Club World Cup kicked into the long grass by the continued farce surrounding Blatter, Garcia, Russia and Qatar
Frank Warren column: 2014 – boxing is back and winning new fans

Frank Warren: Boxing is back and winning new fans

2014 proves it's now one of sport's biggest hitters again
Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

Jeb Bush vs Hillary Clinton

Karen Tumulty explores the power dynamics of the two first families
Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

Stockholm is rivalling Silicon Valley

The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

Crucified Santa: Urban myth refuses to die

The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

The Boy in the Dress: On set with the stars

Walliams' story about a boy who goes to school in a dress will be shown this Christmas