KPMG Faces Two Investigations From U.K. Accounting Regulator
By Ben Moshinsky - May 9, 2013 7:40 AM ET
The U.K.’s accounting watchdog placed KPMG LLP under two separate investigations, examining its audits of a car seller and the conduct of one of its partners.
The Financial Reporting Council will investigate whether KPMG “was independent” when it audited the annual accounts of Nottingham, England-based Pendragon Plc (PDG) for 2010 and 2011. The regulator is also probing the conduct of a KPMG partner in relation to a “non-timely disposal of a share-holding in a client entity,” the FRC said in separate statements on its website today.
The probes mean the accounting firm could face three FRC inquiries as the regulator decides whether to investigate the audits of HBOS Plc. (LLOY) The FRC is waiting on reports from the U.K. Parliament and financial regulator to consider whether it has a case, spokeswoman Sophie Broom said last month. KPMG was the auditor for HBOS before it was taken over by London-based Lloyds Banking Group Plc in a government-backed deal in 2008. KPMG said it would cooperate with the investigations.
“We take our professional responsibilities very seriously, have stringent policies and procedures in place to ensure that our independence is not compromised and regularly review those procedures to ensure that they remain appropriate,” KPMG said in an e-mailed statement.
John Griffith-Jones, the chairman of the newly-created Financial Conduct Authority, was senior partner of KPMG’s U.K. unit between 2006 and 2012.
The accounting firm said it is “disappointed” that one of its partners “failed to dispose of the relevant shares on a timely basis and that our firm’s procedures, in this instance, did not deal appropriately with that failure.”
Regarding the Pendragon audits, KPMG said it is “of the view that our independence as auditor for these years was maintained.”
Victoria Finn, spokeswoman for Pendragon, didn’t immediately return a phone message seeking comment.
To contact the reporter on this story: Ben Moshinsky in London at email@example.com
To contact the editor responsible for this story: Anthony Aarons at firstname.lastname@example.org