KPMG under scrutiny over Irish Nationwide audit

KPMG will soon publish a review of its audit of Irish Nationwide Building Society after the mutual had to be nationalised in 2010 because of multi-billion pound losses.

Although KPMG raised concerns about financial problems at Irish Nationwide in reports going back to 2000, the Big Four firm has come under pressure to reveal how much it knew about what was going on at the mutual, the Irish Times reported.

According to the paper, in 2000 KPMG said in a report sent to INBS’s board and the Central Bank that “there are no concentration limits applied to the components of the commercial (lending) portfolio in its entirety... the ongoing monitoring process of commercial loan facilities is not formalised and not documented.”

The KPMG report concluded that Irish Nationwide was operating in a manner where there was insufficient oversight of its lending and not enough focus on the risk of expanding lending by billions to developers year after year, the Irish Times reported.

KPMG Ireland’s press office did not respond to a request for comment from AccountingWEB.

Comments

Incestuous?

Brend201 | | Permalink

The article does not make clear how incestuous the whole thing is.

KPMG were the auditors of Irish Nationwide Building Society for over 20 years.  The Society became hopelessly insolvent and was rescued by the State via the Irish Bank Resolution Corporation (IBRC).  Subsequently, the government placed IBRC in liquidation and appointed two partners in ..... KPMG as Special Liquidators.  

Now, the Special Liquidators (KPMG) are suing all of the former directors (including the former dominant chief executive) - but not the auditors.  

Needless to say, one of the former directors has brought an action highlighting this "glaring conflict of interest" and asking for KPMG (auditors) to be added as defendants in the case brought by KPMG (Special Liquidators).  

The KPMG report on their audit will be interesting.