• Register
Return to: Home > News > KPMG UK fined £5m by the FRC

KPMG UK fined £5m by the FRC

The UK’s Financial Reporting Council (FRC) has fined KPMG UK £5m ($6.5m), discounted for settlement to £4m, in relation to the audit of the financial statements of The Co-operative Bank (Co-op Bank) for the year ended 31 December 2009.

KPMG audit partner Andrew Walker has also been fined for £125,000, discounted for settlement to £100,000) and severely reprimanded.

In addition to the fine, all KPMG’s audit engagements with credit institutions for audits in 2019, 2020 and 2021, will be subjected to an additional review by a separate KPMG Audit Quality team.

KPMG’s misconduct occurred shortly after Co-op Bank’s merger with the Britannia Building Society (Britannia).

Both KPMG and Walker admitted their misconduct fell short of the standards relating to the audit of Fair Value Adjustments (FVAs) in relation to loans (Leek Notes) within the commercial loan book acquired from Britannia and the audit of FVAs and liabilities under a series of loan notes.

The misconduct in these two areas arose from failure to obtain sufficient appropriate audit evidence, failure to exercise sufficient professional scepticism and failure to inform Co-op Bank that the disclosure of the Leek Notes in the financial statements was not adequate.

The CFO of the Co-op Bank was also considered by the FRC, as he has previously admitted misconduct and was excluded from membership of the ICAEW for six years.

The tribunal approved the terms of settlement agreed by the FRC’s Executive Counsel.

A spokesperson for KPMG said: “We note the FRC’s announcement regarding our audit of the Coop Bank for the year ended 31 December 2009. We regret that some of our audit work around specific elements of the Bank’s Fair Value Adjustments did not meet the appropriate standards. The work in question was conducted almost a decade ago and we have significantly enhanced our procedures and training around the areas in question since then.”

Last week, KPMG UK was fined £6m by the FRC in relation to its audits of Lloyd’s of London based firm Lloyd’s Syndicate 218.


Top Content

    Brazil: regulation and technology form basis for recovery

    Opportunities in the capital markets and the ever-growing influence of technology are expected to have a significant impact on the Brazilian accounting profession over the next 12 months, writes Paul Golden.

    read more

    Mentoring support and the opportunity to delegate

    Jon Lisby will be known to many from his former role as CEO of Kreston International. Here, he explains the background to his new venture, Global Alliance Advisory Services (GAAS), and how he aims to offer support to alliance CEOs.

    read more

    Global by name, global by nature

    Stephen Heathcote became chief executive officer of PrimeGlobal on 1 June 2019. Robin Amlôt met him to discuss the various new challenges that he has taken on, and his ambitions for the association.

    read more

    ARGA team, assemble!

    The new top team has been named that will see in root-and-branch reform at the Financial Reporting Council (FRC) as it transforms into the Audit, Reporting and Governance Authority (ARGA). Will the new duo be as dynamic as some are hoping? Robin Amlôt reports.

    read more


    As the Coronavirus (COVID-19) continues to spread across the world, the International Accounting Bulletin and The Accountant will be collating all the latest news and updates from the profession on the pandemic’s impact.

    read more
Privacy Policy

We have updated our privacy policy. In the latest update it explains what cookies are and how we use them on our site. To learn more about cookies and their benefits, please view our privacy policy. Please be aware that parts of this site will not function correctly if you disable cookies. By continuing to use this site, you consent to our use of cookies in accordance with our privacy policy unless you have disabled them.