The Treasury select committee chairman has asked for assurances from the chief executive of the Financial Reporting Council (FRC) about the "scope, independence and rigour" of the regulator's preliminary investigation into KPMG's audit of HBOS bank before it collapsed in 2008.
In a letter to Stephen Haddrill, chief executive of the UK's regulator for accounting and auditing and corporate governance, MP Andrew Tyrie said that the HBOS report exposed the "staggeringly poor quality of HBOS’ loan book". Regulators examined the underlying causes, but left an assessment of the role of the auditors to the FRC.
In the letter Tyrie asked the FRC to explain how it decided to investigate two aspects of KPMG's audit of HBOS rather than a broader review. He asked whether the audit investigation can be widened.
He also asked whether the FRC will publish a full report into the auditing of HBOS. "Given the shocking delay in initiating this work, a less than thorough job would be inexcusable," Tyrie wrote.
The FRC last month announced its investigation into the auditing of HBOS. It had previously previously examined the bad debt provisions at HBOS and decided not to do a full investigation. The FRC has recently been under pressure from MPs and business leaders to reconsider.