The Prudential Regulation Authority (PRA) is believed to have held discussions with financial institutions and other regulators over potential risks to KPMG’s business, following the firm’s string of problems in South Africa and challenges to its auditing of collapsed outsourcer Carillion
The Financial Times quotes sources as saying the PRA had held soundings to see if KPMG’s existing clients were planning to cut ties with the firm or whether it was struggling to win new business. The paper says there were also concerns about whether its South African operation, which has been significantly streamlined following a series of accounting scandals, could pose problems for KPMG’s international network.
KPMG currently audits several banks and insurers that come under the PRA’s remit, including Barclays, Standard Chartered, Legal & General and Prudential, and is the Bank of England auditor.
Bill Michael, chairman of KPMG UK, said: ‘KPMG is in robust financial health. KPMG is seeing outstanding growth right across our audit, tax and advisory arms, we have a strong balance sheet and are well funded with a growing pipeline. The Bank of England has a legitimate duty to scrutinise the market. But they have not approached KPMG formally or informally. If they were to, we would be happy to reassure them of our robust financial health.’
The PRA said: ‘The PRA is not in discussions about the viability of any audit firm.’
Report by Pat Sweet
