The Financial Reporting Council (FRC) is conducting a disciplinary hearing involving Douglas Morgan, a former finance director of Equity Syndicate Management Ltd (ESML), KPMG and a partner and former partner at KPMG, in relation to a long running investigation into financial reporting at a Lloyds syndicate
Morgan, who is a member of CIMA, faces complaints in relation to ESML's claims reserving process in the financial reporting years ending 31 December 2007, 2008 and 2009 and the provisions for outstanding claims included in the financial statements for those years of Syndicate 218, a Lloyds group specialising in motor insurance.
The FRC is also investigating the conduct of KPMG and partner Mark Taylor (for the financial reporting years ending 31 December 2008 and 2009) and former partner Anthony Hulse (for the financial reporting year ending 31 December 2009) in relation to the audit of the financial statements of Syndicate 218.
Taylor was the audit engagement partner for Syndicate 218 and Hulse was the audit engagement partner for IAG UK Holdings Ltd, at the time the ultimate UK parent undertaking of the corporate member of Syndicate 218.
The complaints concern the audit work carried out in respect of reserving, the sufficiency of evidence obtained and the unqualified opinions given.
The hearing will take place on 16 October.
The FRC’s formal investigation began in 2012 following a referral from the then Financial Services Authority (FSA) (predecessor of the Financial Conduct Authority), and was described as ‘very complicated’.
'After the problem at the syndicate, the FSA were investigating and they ultimately referred the case to us and we opened a formal investigation in 2012,' a FRC spokesperson told Accountancy. 'It was very complicated and took a long time. There was an actuarial case also. The process of doing investigations and proposed complaints and finalising took until 2016. The hearing was 2017 and the result 2018.
Report by Pat Sweet
