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(Reuters) – KPMG and one of its partners have admitted to serious failings in compliance reports for Bank of New York Mellon , Britain’s accountancy watchdog said, potentially leading to heavy fines as the auditor comes under unprecedented scrutiny.
The Financial Reporting Council (FRC) said on Wednesday that KPMG, one of the world’s “Big Four” accountants, and partner Richard Hinton admitted to misconduct after an investigation into 2011 reports on client assets held by BNY Mellon and its London branch.
Tribunal - Sanctions - FRC - Client - Money
A disciplinary tribunal will be convened to decide what sanctions should be imposed, the FRC said, adding that no client money or assets were lost as a result of the misconduct.
The accounting watchdog, which issued new so-called CASS guidance for client assets reports in 2011, has already responded to pressure to crack down on auditors and imposed larger fines for misconduct or failings.
KPMG - Hinton - Consideration - Records - Custody
KPMG and Hinton failed to give adequate consideration on whether the records of custody relationships maintained by BNY Mellon were compliant with certain rules, the FRC said on Wednesday.
“We accept and regret that our work did not fully reflect all aspects of this new (CASS) guidance,” KPMG said in an email.
Change - Environment - CASS - Procedures - This
“There has been further fundamental change in the regulatory environment and we have significantly enhanced our CASS procedures and training to reflect this.”
KPMG partner Hinton did not respond immediately to a request for comment...
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