The FRC has confirmed that KPMG and two of its audit partners are to face a disciplinary tribunal on 27 November over the firms handling of the audit of Lloyd’s Syndicate 218 (Equity Red Star), a specialist motor insurer
The hearing will be held on 27 November at the International Dispute Resolution Centre Limited.
The FRC’s formal complaint is against KPMG, Mark Taylor, a partner at KPMG and a member of the ICAEW and Anthony Hulse, a former KPMG partner and a member of the ICAEW.
The complaints concern the conduct of KPMG and Taylor (for the financial reporting years ending 31 December 2008 and 2009) and Hulse (for the financial reporting year ending 31 December 2009) in relation to the audit of the financial statements of Syndicate 218 for those years.
KPMG said: ‘We take our audit responsibilities very seriously and we believe that our audit work in relation to the Equity Red Star syndicate met the relevant professional standards. Given that the matter is subject to formal consideration by a tribunal, we will not be commenting further.’
The regulator began investigations in 2012 into Lloyd’s Syndicate 218’s report and accounts for the years ended 31 December 2007, 2008 and 2009, and also into the provision of actuarial advice to Equity Syndicate Management Ltd (ESML) in relation to ESML’s reserving for Lloyds Syndicate 218 between 2007 and 2009.
The FRC is also taking disciplinary action against Douglas Morgan, a former finance director of Equity Syndicate Management Limited (ESML), 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.
It is alleged that the conduct Morgan, KPMG, Taylor and Hulse fell significantly short of the standards reasonably to be expected of a member firm and a member.
