HBOS Audit Probe Must Be Reconsidered, U.K. Lawmaker Tyrie Saysby
Urges Financial Reporting Council to review KPMG audit
Two reports into collapse of HBOS published last month
The U.K. accounting regulator should re-examine its decision not to investigate the auditing of now-defunct HBOS Plc by KPMG if it wants to restore public confidence in the audit process, according to U.K. lawmaker and Treasury Committee Chair Andrew Tyrie.
“Bearing in mind the level of public financial support and losses to shareholders, it appears unlikely that the HBOS case does not clear the hurdle required to trigger a thorough re-examination,” Tyrie said in his letter to the Financial Reporting Council dated Dec. 10 . “It is now essential –- in the interests of public confidence -- that the FRC get on with this investigation, and without delay.”
Tyrie’s demand follows two reports last month into the 2008 collapse of HBOS, among the most controversial episodes of Britain’s financial crisis. One was authored by the Financial Conduct Authority and the Prudential Regulation Authority. Another examined the enforcement action taken over the debacle, which led to a state-brokered takeover by Lloyds Banking Group Plc and a 20.5 billion-pound ($31 billion) taxpayer bailout.
The FRC was invited to conduct a probe into the auditing of HBOS by KPMG as part of the wider reviews but declined. If the regulator maintains an investigation isn’t needed, its reasons will "warrant detailed scrutiny," Tyrie said in his letter.
He also wrote to the Institute of Chartered Secretaries and Administrators about the importance of accurate minute-taking at committee meetings, in light of the HBOS failures highlighted in the reports.
A spokesman for the FRC confirmed the regulator had received the letter and said they’ve noted Tyrie’s comments. KPMG didn’t immediately respond to a request for comment. The ICSA said it will issue some updated guidance on the minuting of meetings next year.
The authors of the HBOS reports will be quizzed by Tyrie and the Treasury Committee on Monday about their reviews.