Financial News

  • 21 January 2014, 12:55

KPMG Investigated Over Co-op Bank Audits

'Big Four' accounting firm KPMG is being investigated by the accounting watchdog over auditing of the beleaguered Co-op Bank, it has been confirmed.

The Co-op Bank had bid for 632 Lloyds Banking Group branches in 2013 but a 1.5bn capital shortfall was discovered.

"The Financial Reporting Council (FRC) has launched an investigation ? into the preparation, approval and audit of the financial statements of the Co-operative Bank plc, up to and including the year ended 31 December 2012," the watchdog said in a statement.

This is the latest in a number of inquiries into conduct and procedures at the bank.

In early January, the Financial Conduct Authority and the Prudential Regulation Authority said they would commence investigations into the Co-op Bank.

The bank is also being scrutinised through an internal review, a Treasury-commissioned inquiry and a Treasury Select Committee (TSC) probe.

Police are also investigating disgraced ex-chairman Paul Flowers over drug allegations.

Last month, the TSC grilled KPMG partners over its role in the Co-op takeover of the Britannia Building Society.

In response to news from the FRC, KPMG issued a statement.

It said: "As auditor to the bank we believe that we have provided, and continue to provide, robust audits which provide rigorous challenge to the judgements and disclosures proposed by the bank's management.

"We look forward to co-operating fully with the FRC (and other regulatory authorities) in their investigations."

Meanwhile, the parent Co-operative Group has announced a decision to scrap the sale of its general insurance business.

This follows a restructuring deal reducing the capital contribution requited to help the struggling bank arm.

The insurance business was due to be sold in 2014 and would have netted several hundred million pounds.

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