KPMG audited HBOS in 2007. HBOS had to be bailed out following extreme financial conditions in late 2008 (ie the debt crisis). Politicians and the media have over the years bayed for blood, under the view that someone must take blame. The FRC (Financial Reporting Council) were tasked with looking at KPMG’s role as auditor. To the consternation of the Treasury Select Committee, the FRC have reported that KPMG cannot be held to blame. Having watched the Treasury Select Committee in action, that consternation comes as no surprise. Put another way, the public good would be better served if the committee had a deeper understanding of finance.
What is an audit for? Many assume it’s a business bill of health when it’s actually a check on whether statutory reports are true and fair. Interpretation is for investors and risk takers. I personally wouldn’t have put any money into any bank after 2004 but it’s plain many rode the market to the top and beyond. It is fair to say, however, that debt financing – the continuing cause of problems – has had far too easy a ride and in that regard, we haven’t really moved on from 2008.