KPMG faces a R230 million fine in the UK for a failed bank audit that, unlike VBS in South Africa, was an honest mistake
- A regulator in the United Kingdom wants to fine auditors KPMG R230 million for mistakes in a bank audit.
- KPMG argues it should pay only R25.4 million, because it only made mistakes in its work on Bank of New York Mellon, with no criminality.
- That is in stark contrast to the collapse of VBS bank in South Africa, where a now former KPMG partner is accused of fraud.
- For more go to Business Insider South Africa.
A regulator in the United Kingdom wants to fine KPMG at least £12.5 million – the equivalent of R230 million – for "misconduct" in a bank audit that bears little resemblance to its work for the infamous VBS Bank in South Africa.
The Financial Reporting Council (FRC) this week outlined the reasons it believes KPMG should face what would be a record fine for misconduct to which KPMG has admitted.
KPMG says it made mistakes, with no criminal intent, when it did not properly report to UK regulators on the Bank of New York Mellon in 2011 on the safeguarding of client assets at the bank.
A KPMG partner admitted to misconduct in the case.
KPMG this week argued it should face a much smaller fine, the equivalent of only R25.4 million, because its conduct had not been intentional, and there had been no criminality involved.
That is in stark contrast to the accusations KPMG faces in South Africa around the collapsed VBS Mutual Bank.
Right from the outset it appeared as if there had been massive fraud at VBS, and KPMG suspended its top executive who had been responsible for auditing VBS. Various people have admitted to fraud involving VBS, and a report has pointed directly at KPMG, with the allegation that its audit partner was actively involved in fraud – and a recommendation that KPMG should be held liable.
The fine to be imposed in the UK must now be decided on by an independent tribunal.
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