KPMG and two of its audit partners who are ICAEW members, plus a CIMA member, are to face a disciplinary tribunal over their handling of the audit of Lloyd’s Syndicate 218 (Equity Red Star), a specialist motor insurer, following an investigation by the Financial Reporting Council (FRC)
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.
It has now announced it will bring formal complaints under its accountancy scheme against KPMG, Mark Taylor, the audit engagement partner for Syndicate 218 and former partner. Anthony Hulse, who 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 complaints against KPMG and Taylor concern the financial years ending 2008 and 2009, while the complaints against Hulse concern the financial year ending 31 December 2009.
The FRC is also taking disciplinary action against Douglas Morgan, a CIMA member and James Rakow, a member of the Institute and Faculty of Actuaries.
The formal complaint against Morgan, who is a former director of ESML, alleges a failure to act with professional competence and due care in relation to reserving practices deployed by ESML and overseen by him during the period 2007–2009.
Rakow, an associate partner with Deloitte, is facing action under the FRC’s actuarial scheme over his provision of actuarial services to ESML and Syndicate 218 in respect of the financial years ending 31 December 2007, 2008, and 2009.
The FRC said a date for a hearing before an independent joint tribunal will be announced in due course.
