Wealth Manager - the site for professional investment managers

Register free for our breaking news email alerts with analysis and cutting edge commentary from our award winning team. Registration only takes a minute.

KPMG admits compliance 'misconduct' on £1tn in BNY funds

1 Comment
KPMG admits compliance 'misconduct' on £1tn in BNY funds

KPMG has admitted misconduct on its reporting of up to £1 trillion of client assets held by BNY Mellon.

The allegations follow a Financial Reporting Council (FRC) investigation, initiated by a referral from the Financial Conduct Authority (FCA) into compliance work completed by the partnership in 2011.

Both KPMG and London-based financial service audit partner Richard Hinton will be referred to the FRC's disciplinary body. No client is believed to have lost money as a result of the misconduct.

The client assets in question were worth over £1 trillion at their peak.

The FRC said both Hinton and KPMG had fallen ‘significantly short’ of the standards of the Institute of Chartered Accountants in England and Wales.

The firm had ‘failed to give adequate consideration’ to whether records of client assets held by BNY Mellon’s international and London branches were compliant.

In turn, this meant KPMG auditing was insufficient to support the opinions to set out in a 2011 client assets report to the FCA.

A spokesperson for KPMG said: 'In 2011, the FRC issued new guidance applicable to client assets reports. We accept and regret that our work did not fully reflect all aspects of this new guidance.

'Since that time, there has been further fundamental change in the regulatory environment and we have significantly enhanced our [client asset] procedures and training to reflect this.'

KPMG has been caught up in a number of scandals in the last year, as perceptions of the independence of the profession has taken a beating.

MPs accused the firm in May of being ‘complicit’ in the accountancy practices of government contractor Carillion, which KPMG audited for 19 years prior to its collapse in January.

In June, the FRC found that 50% of the firm’s audits of FTSE 350 companies needed ‘more than limited improvements’.

 

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Citywire TV
Play Citywire 20: Investec's du Toit on managing the 'jerk factor'

Citywire 20: Investec's du Toit on managing the 'jerk factor'

Investec boss Hendrik du Toit believes he has become far more decisive over the last 20 years, especially when it comes to managing 'jerk' factor.

Play Citywire 20: Hugh Young's bleak lesson

Citywire 20: Hugh Young's bleak lesson

In the latest video to mark Citywire's 20th birthday, Aberdeen Standard Investments Asia head reminisces about one of the toughest periods in his career.

Play IWD 2019 video: fund and wealth figures define diversity

IWD 2019 video: fund and wealth figures define diversity

To mark International Women's Day, we have spoken to a variety of top fund houses and wealth managers about their definition of diversity, and how they hope to achieve a more inclusive workplace.

Read More
Wealth Manager on Twitter