KPMG will have to increase its due diligence on meeting auditing standards.
In a development that yet again highlight the poor performance of accounting firm KPMG, Britain’s accounting watchdog has levied a fine of $4.24 million on KPMG for failing to audit client accounts of BNY Mellon bank properly.
Of late, KPMG has been facing a string of penalties for poor performance.
The fine is likely to maintain pressure on the British government to table legislation to implement a proposed shake-up of auditing; it could also see the creation of a more powerful watchdog.
According to a statement by the Financial Reporting Council (FRC), BNY Mellon held more than a trillion pounds in assets on behalf of its customers, which under “CASS” safekeeping rules must be audited to ensure the assets are being kept safe.
KPMG and Richard Hinton, who signed the client assets report on behalf of KPMG, admitted misconduct, said the FRC.
On its part, KPMG said it regretted that aspects of its work did not meet the standards expected by the regulator.
“We are happy to undertake the additional review process outlined by the FRC as part of our drive to improve audit quality,” said KPMG in a statement.
In 2015, Britain’s finance industry watchdog, the Financial Conduct Authority, had fined BNY Mellon 126 million pounds for failing to keep customer money safe.
In 2018-2019, the FCA fined accounting firms nearly 43 million pounds, with KPMG making up nearly half of the total after admitting misconduct in audits of The Co-operative Bank, retailer Ted Baker, and professional services firm Quindell.
As a result of its poor performance, the FCA has placed KPMG into close supervision measures with an added requirement of a quality performance review of everyone who signs a client assets report on behalf of KPMG.
Hinton was not a partner at KPMG and is not currently working as a CASS auditor, said the FRC.
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