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7 Sep 2016 11:24am

FRC launches formal complaint against KPMG

The FRC’s executive counsel has delivered a formal complaint against KPMG and four individuals

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Caption: KPMG's role as auditor to Lloyd's motor insurance syndicate to be investigated

The complaints, which are separated into two parts, relate to KPMG's audit of Lloyd’s syndicate 218 – a Lloyd’s motor insurance underwriter –  and the actuarial advice provided to Equity Syndicate Management Ltd (ESML) by a Deloitte associate partner in relation to its reserving for Lloyd’s syndicate 218.

ICAEW members KPMG partner Mark Taylor, the audit partner for syndicate 218, and former partner Anthony Hulse, the audit partner for IAG holdings – then the UK parent of Syndicate 218, are named. The complaints against KPMG and Taylor concern the audits of financial years ending 2008 and 2009, and Hulse, the financial year ending 2009.

A spokesperson for KPMG said, “In so far as the complaints relate to the KPMG parties, we have co-operated fully with the FRC's investigation, which was launched in March 2012.

“We take our audit responsibilities very seriously and, as we have commented previously, we believe that our audit work in relation to the Equity Red Star syndicate met the relevant professional standards. However, given that the matter is now subject to formal consideration by a tribunal, we will not be commenting further.”

The complaint against Douglas Morgan, a former director of ESML and a CIMA member, alleges a “failure to act with professional competence and due care” in relation to the reserving practices carried out by his company and overseen by him, in the period of 2007-2009.

There is a further complaint against James Rakow, an associate partner with Deloitte, in connection with the provision of actuarial services by him, to ESML and Syndicate 218, relating to the financial years ending December 2008, 2008 and 2009.

Ellie Clayton

 

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