Chair of the Treasury Committee comments on the news that the Financial Reporting Council (FRC) has closed its investigation into KPMG’s audit of HBOS
Rt Hon. Nicky Morgan MP said:
"As early as 2004, the FSA described HBOS as 'an accident waiting to happen'. As the PRA and FCA have since made clear, responsibility for its subsequent failure lies not with external market conditions during the financial crisis, but with the failure of its Board to instil an appropriate culture, and to provide the necessary challenge to the executive.
HBOS' corporate governance was, in the words of the PCBS, "a model of self-delusion".
The FRC initially decided not to investigate KPMG's audit of HBOS. The Treasury Committee concluded that 'this was a serious mistake' that 'suggests a lack of curiosity and diligence'. It was only after pressure from the Committee that the FRC decided to investigate the role of auditors in the bank’s demise.
When it publishes its detailed report next month, the Committee will expect the FRC to provide a full explanation of its decision not to take further action against KPMG. It may take further evidence in due course."