KPMG admits it botched bank audit

TAinTEd beancounter KPMg has admitted failing to properly audit the books of banking firm bnY Mellon group.

The accountant and its partner Richard Hinton did not ensure bnY’s records of relationships with clients were up to scratch, according to regulators.

KPMg and Hinton will now face a disciplinary tribunal and a fine from the Financial Reporting Council (FRC) watchdog.

it is a fresh blow for KPMg after a string of scandals, and growing calls for the so- called big four accountants to be broken up. The industry has been attacked for its complacency and cosy relationship with clients following the collapse of outsourcing behemoth Carillion earlier this year.

KPMg and fellow auditors PwC, deloitte and EY worked with Carillion in the run-up to its failure and failed to spot problems.

Meanwhile, the FRC is facing fierce criticism for doing too little to keep the accountants in line.

The watchdog, stuffed with former partners from the big four, has sparked anger in the past for letting firms off the hook. Chiefs notoriously cleared KPMg for giving toxic bank HbOS a clean bill of health before the financial crisis. it was bought by Lloyds in a disastrous 2008 takeover which dragged both banks to the brink of collapse before taxpayers rescued them in a £20.3bn bailout.

The FRC is now subject to a government-backed review to determine if it is fit for purpose.

it has issued a flurry of rulings over the past few months, including a £3.2m fine against KPMg for missing overstated revenues at claims firm Quindell, which is now being investigated for fraud.

KPMg’s global revenues hit a record £20bn in the last financial year, while UK partners were paid £519,000 each. KPMg said the case relates to work done in 2011. it added: ‘no client of either The bank of new York Mellon (international) Limited or the London branch suffered actual financial or other loss. We have cooperated fully.’ A fine will be decided by an independent tribunal.