KPMG Audit investigated over HBOS

The Financial Reporting Council (FRC) said it has started an investigation into the conduct of KPMG Audit Plc’s audit of HBOS for the year ended December 31, 2007 — just before the bank’s collapse.

The investigation has been instituted by the FRC’s conduct committee following the completion of the executive counsel’s preliminary enquiries announced on January 21, 2016.

The FRC said the investigation relates to the extent to which KPMG Audit, during the course of their audit of HBOS:

  • considered the appropriateness of management’s use of the going concern assumption in the preparation of the financial statements for the year ended 31 December 2007
  • considered whether there were material uncertainties about the entity’s ability to continue as a going concern that needed to be disclosed in the financial statements
The FRC said KPMG Audit carried out the relevant audit engagement but its business has now been transferred to KPMG LLP, who will therefore be subject to the investigation.