Big four accountancy firm KPMG could be hit with a £4m fine over its supervision of the Co-operative Bank’s accounts, Sky News has reported.
The Financial Reporting Council started reviewing the firm’s audit of the bank in 2014. The investigation is ongoing.
KPMG handled the bank’s acquisition of the Britannia Building Society in 2009 – widely seen as one of the factors behind the exposure of a £1.5bn capital shortfall at the Bank in May 2013.
In 2016 the Co-operative Bank’s former chief financial officer and chief executive, Barry Tootell, reached a settlement agreement with the Institute of Chartered Accountants in England and Wales (ICAEW). He admitted misconduct and agreed to be excluded from membership of the accountancy body for six years.
In 2016 the Prudential Regulation Authority also carried out an enforcement investigation into the Co-operative Bank. The FRF decided the PRA’s findings were “conclusive evidence of misconduct” and banned Mr Tootell – along with former Co-operative Bank managing director, Keith Anderson – from holding banking positions of significant influence.
The Bank appointed EY as auditor in 2014, replacing KPMG, who had been the Co-op Group’s auditor for 30 years. EY are also the current auditors of the Co-op Group, which sold its final stake in the bank in 2017.
FRC and KPMG declined to comment.
