Treasury committee chairman demands HBOS audit investigation

Andrew Tyrie Tory conf 2013.jpg

Treasury committee chairman Andrew Tyrie has demanded an investigation into KPMG’s role as the auditor for collapsed bank HBOS.

During the preparation of a report that last month slammed the FSA for its failings in investigating the bank, the Financial Reporting Council was invited to probe KPMG’s work, but declined to do so.

Tyrie describes the accountancy watchdog’s decision as “a serious mistake”.

He says: “The shortcomings of the audit process were serious. As a result, Parliament’s specialist advisers concluded that the circumstances surrounding the audit, conducted by KPMG, deserved thorough scrutiny by the FRC.

“Given the findings of the full report, the accompanying report by Andrew Green QC into enforcement and the report of Parliament’s specialist advisers, confidence in the audit process will have taken a knock.

“It is now essential – in the interests of public confidence – that the FRC get on with this investigation, and without delay.”

Tyrie has written to both FRC chief executive Stephen Haddrill and Institute of Chartered Secretaries and Administrators chief executive Simon Osborne to press his case, raising concerns with the latter on poor quality of board minute taking.

He says: “More accurate and detailed board minutes could have provided the regulator and Parliament’s independent reviewers with the material needed better to assess how the Board came to its decisions – including whether the non-executive directors were performing their roles to the required standard.

“The public need to be assured that the seriously deficient minute taking practices of HBOS, exposed by this report and that of the [Treasury committee’s] specialist advisers, will not be repeated. Banks, particularly large banks, carry considerable conduct and prudential risk.”