Accountancy Age reports today that KPMG is set to face a tribunal over its auditing of Independent Insurance after the Joint Disciplinary Scheme formally laid complaints today.
>The firm audited the group between 1986 and its collapse, and signed off Independent’s last company accounts in 2000. IIG collapsed in June 2000 with ‘unquantifiable losses’ arising from reinsurance contracts that were highly unfavourable to the company against a background of rising insurance claims.
I recall thinking that all was not right – definitely not right – with Independent when a stock-market tipsheet to which I used to subscribe ran a huge story saying how brilliant they were, well-run, financially prudent etc. Since I had some inkling through market rumour about their reserving practices, I concluded that if they were able to pull the wool over the eyes of some otherwise pretty smart analysts, there must really be something nasty in the woodshed.
The Tribunal’s sanctions against a firm include the following:
* Reprimand
* Severe reprimand
* An unlimited fine
* Withdrawal of its registration as an auditor
* Withdrawal of its investment business certificate
I wonder what the difference is between a ‘reprimand’ and a ’severe reprimand’. “You’ve been bad” and “You’ve been very bad” perhaps. KPMG are no doubt quaking even now.
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