KPMG Fined By UK Regulator Over 2011 Bank Of New York Mellon Audit

(Alliance News) - The UK Financial Reporting Council said on Thursday that is has issued a fine ...

Alliance News 1 August, 2019 | 11:45AM
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(Alliance News) - The UK Financial Reporting Council said on Thursday that is has issued a fine to KPMG Audit PLC for its failings over a 2011 client assets reports for the Bank of New York Mellon Ltd, the US bank's London unit.

KPMG was fined GBP3.5 million following a May tribunal, with a 30% discount being applied to the initial GBP5.0 million. The regulator said the deduction was applied because KPMG admitted its misconduct.

Richard Hinton, a partner at the accounting firm, was fined GBP52,500, a 30% discount on his initial reprimand of GBP75,000 was also applied.

The tribunal said that although there was no dishonesty involved, the "misconduct consisted of a failure to understand and to apply fundamental rules of client assets reporting, requiring the banks to keep their own records and carry out their asset reconciliation on their own legal entity basis.

"The misconduct involved the misapplication of rules that are of very great importance to the financial system."

KPMG, one of the big four accounting firms, was issued the fine because it "failed to ensure appropriate training support and supervision" during its 2011 audit of the bank, the council said.

In addition to the fines, KPMG will also be required to carry out a performance review of every employee who signs a client assets report. As part of the assessment process, KPMG must provide written reports to the regulator outlining details, conclusions and actions from the review.

The council initially wanted to issue a fine of GBP12.5 million, according to the Financial Times, which would have been the largest sanction it has ever issued.

As it stands, the GBP6.5 million fine issued to accounting firm PricewaterhouseCoopers in June 2018 over its British Home Stores Ltd audit remains the regulator's largest.

By Eric Cunha;

Copyright 2019 Alliance News Limited. All Rights Reserved.

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