KPMG admits misconduct in compliance reports for BNY Mellon
20 Sep 2018

Big Four auditor KPMG has admitted to misconduct over its compliance reports for the Bank of New York Mellon, the UK accounting regulator said.

According to the Financial Reporting Council (FRC), KPMG and one of its senior partners failed to give adequate consideration as to whether the records of custody relationships maintained by the BNY Mellon Group were compliant with CASS rules (the Financial Conduct Authority’s Client Assets Sourcebook called “CASS”).

They also failed to undertake ‘sufficient’ audit procedures to support the opinions set out in the 2011 client asset reports made to the FCA.

The allegations relate to custody assets held by BNY Mellon International and its London branch worth, at their peak, over £1 trillion, the FRC said, adding that it is not alleged that clients lost money or assets as a result of the misconduct.

KPMG, quoted in Reuters, said: “We accept and regret that our work did not fully reflect all aspects of this new (CASS) guidance,”

“There has been further fundamental change in the regulatory environment and we have significantly enhanced our CASS procedures and training to reflect this.”

A spokeswoman for BNY Mellon reportedly said: “BNY Mellon is aware of the conclusions from the Financial Reporting Council’s investigation … We have no comment to make.”

A disciplinary tribunal it expected to recommend what sanctions should be imposed.


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