The Financial Reporting Council (FRC), a UK regulatory body that governs accounting, auditing and actuarial work, has started investigation on KPMG’s audit of Co-operative Bank’s account until 31 December 2012.
The move by FRC came after Co-operative Bank was found to have a capital hole of £1.5bn in 2013.
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KPMG said given the issues which Co-operative Bank has experienced in recent months and in the light of the high media profile and public interest associated with these issues, it is understandable that there should be appropriate regulatory scrutiny.
"As auditor to the bank we believe that we have provided, and continue to provide, robust audits which provide rigorous challenge to the judgements and disclosures proposed by the bank’s management," KMPG added.
Co-operative Bank, which announced in March 2013 to sell its general and life insurance businesses under its plan to add £1bn in the troubled bank, said that it has halted the sale as part of the bail-out of its near-collapsed bank.
If the companies are found guilty, FRC can impose sanctions and fines on both KPMG and Co-operative Bank.
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