KPMG fined 5 mln pounds over audit misconduct of Co-operative Bank

LONDON -- Accountancy giant KPMG was fined 5 million pounds (about 6.5 million US dollars) over an audit misconduct of Co-operative Bank in 2009, revealed a statement issued Wednesday by the Financial Reporting Council (FRC), an independent British regulator for auditors, accountants and actuaries.

The regulator said that KPMG was fined 5 million pounds, discounted for a settlement to 4 million pounds (5.2 million dollars), and was reprimanded.

Meanwhile, KPMG's audit partner Andrew Walker was also fined 125,000 pounds (163,000 dollars), discounted for a settlement to 100,000 pounds and was reprimanded.

The regulator stated that the misconduct took place in 2009 shortly after the Co-operative Bank's merger with the Britannia Building Society, a mutual building society in Britain.

KPMG and Andrew Walker both admitted that their conduct was significantly short of the standards in two area, which included "failures to obtain sufficient appropriate audit evidence; failures to exercise sufficient professional skepticism and a failure to inform Co-op Bank that the disclosure of the expected lives of the Leek Notes in the financial statements was not adequate," the regulator said.

In addition, "all KPMG's audit engagements with credit institutions for audits with 2019, 2020 and 2021 year ends will be subjected to an additional review by a separate KPMG Audit Quality team, who will provide reports to the FRC," it added.

KPMG will also pay 500,000 pounds (650,000 dollars) for the FRC's costs.