Risk & Compliance

British Accounting Watchdog Investigating KPMG

The U.K. Financial Reporting Council is looking at whether KPMG adequately reported on Bank on New York Mellon's compliance with safe-keeping rules.
Katie Kuehner-HebertJune 23, 2015

Britain’s Financial Reporting Council Tuesday said that it had launched an investigation into the conduct of KPMG, auditors for The Bank of New York Mellon London branch and The Bank of New York Mellon International.

The investigation is in relation to KPMG’s reporting to the U.K. Financial Services Authority on BNY Mellon’s compliance with the FSA’s client asset rules from 2007 to 2011.

If disciplinary proceedings are commenced, FSA would appoint a “disciplinary tribunal,” the accounting watchdog agency said.

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A KPMG spokesman told Reuters that the auditing firm is “committed to setting the highest standards in our work and will cooperate fully with the FRC in its enquiries.”

Britain’s Financial Conduct Authority in April fined BNY Mellon, the world’s biggest custodian bank, 126 million pounds ($199 million) for failing to keep customer money safe during the financial crisis, according to Reuters. After the 2008 Lehman Brothers collapse, British regulators began checking that custody banks were complying with safe-keeping rules.

KPMG was responsible for reporting to the financial regulator that BNY Mellon was complying with rules on the safe-keeping of customer assets, Reuters said. The FSA has powers to impose unlimited fines and ban an accountant from practicing in the U.K.

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