KPMG IN DOCK OVER CO-OP BANK

TAINTED beancounter KPMG has been fined for failing to spot a £1.5bn black hole at the Co-op Bank.

It gave a clean bill of health to the lender after it merged with Britannia Building Society in 2009. But a massive financial shortfall was then uncovered at the Co-op, taking the bank to the brink of collapse.

KPMG has now been fined £5m for its oversight by the Financial Reporting Council (FRC) watchdog, although it will only pay £4m, as it settled early.

Audit partner Andrew Walker was fined £125,000, discounted to £100,000.

The FRC said Walker and KPMG have been severely reprimanded. It added: ‘The misconduct included failures to obtain sufficient appropriate audit evidence and failures to exercise sufficient professional scepticism.’

It follows a £6m fine last week for mistakes in KPMG’s audit of car and motorbike insurer Equity Red Star. KPMG was also fined £2.1m last year over work for clothes retailer Ted Baker, and £4.5m last June for failures at insurance firm Quindell.

But the penalties are a drop in the ocean compared to its annual revenues – £2.3bn in the UK last year. Partners took home an average £601,000, which would pay for Walker’s fine six times over.