In our monthly roundup of developments in audit and governance, highlights of the EU audit regulation and directive (ARD), decline in audit firms by 4.6%, BHS auditor faces scrutiny
FRC to investigate KPMG over HBOS audit
The Financial Reporting Council (FRC) has announced it will be holding an investigation under the accountancy scheme into the conduct of KPMG’s audit of HBOS for the year ended 31 December 2007, after coming under severe criticism for failing to take action sooner to examine the Big Four firm’s role in the run up to the bank’s collapse.
The watchdog said the investigation will focus on two questions relating to KPMG’s work on the HBOS audit. This includes the appropriateness of management’s use of the going concern assumption in the preparation of the financial statements for the year ended 31 December 2007.
It will also consider whether there were material uncertainties about the entity’s ability to continue as a going concern that needed to be disclosed in the financial statements.
