KPMG fined £3.5m for BNY Mellon report misconduct
Big Four firm KPMG has been fined £3.5m and one of its directors £52,000 for misconduct related to a client asset report for Bank of New York Mellon in 2011.
Watchdog the Financial Reporting Council (FRC) levied a fine of £5m against KPMG which was discounted by 30 per cent for admissions of misconduct.
It also delivered a severe reprimand and a requirement for a quality performance review affecting each person who signs a clients assets report on behalf of KPMG.
KPMG director Richard Hinton was fined £75,000, discounted 30 per cent for admission of misconduct.
Read more: KPMG stung with £5m fine for Co-op Bank audit failures
He also received a reprimand.
The tribunal found that “the misconduct consisted of a failure to understand and to apply fundamental rules of CASS [Client Asset Sourcebook], requiring the banks to keep their own records and carry out their asset reconciliations on their own legal entity basis. No dishonesty or recklessness was involved but the misconduct involved the misapplication of rules that…are of very great importance to the financial system.”
The penalty is the latest in a string of fines and reprimands for KPMG.
In May 2018 KPMG was fined £4.5m (discounted to £3.15m) in relation to the 2013 audit of professional services firm Quindell.
Read more: Once-staid audit sector enters brave new world
In July 2018 KPMG was fined £3m (discounted to £2.1m) for misconduct in relation to the 2013 and 2014 audits of Ted Baker.
The firm is also being investigated in connection with its audits of the financial statements of outsourcer Carillion which collapsed in January 2018.
A KPMG spokesperson said: “We regret that aspects of our work did not meet the standards expected by our regulator. CASS regulation has evolved significantly since this case and we have fundamentally enhanced the procedures governing our work”