The Financial Reporting Council (FRC) has confirmed plans to launch an investigation into KPMG and its handling of Hbos’ accounts today.
In a statement this morning, the regulator said it had asked its executive counsel to undertake preliminary enquiries under the accountancy scheme, the disciplinary scheme for members of the accounting profession.
The FRC will examine KPMG’s role in auditing the failed bank and granting it ‘going concern’ status in 2007, the year before it had to be rescued by Lloyds TSB. It will also look into whether there were material uncertainties about Hbos' ability to continue as a going concern that it needed to disclose in its financial statements.
In December Andrew Tyrie, chairman of the Treasury Select Committee, called for a probe after a report into why the bank collapsed:
The shortcomings of the audit process were serious. It is essential – in the interests of public confidence – that the FRC get on with this investigation, and without delay.
The Financial Conduct Authority (FCA) and the Bank of England’s Prudential Regulation Authority (PRA) released a dual report into HBOS’ collapse last year, concluding the bank’s executives at the time should be held accountable and recommending investigations be re-opened. The report avoided questions over the standard of KPMG’s work, ruling the auditor’s role falls within the FRC’s remit.