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After the collapse of three US banks, their auditors’ audits are also under review. All three have KPMG.
Not just Financial TimesBut even now Volkskrant Silicon Valley Bank (SVB), Signature Bank and First Republic Bank have also contracted their auditors in addition to their recent bankruptcies.
All three failed US banks received approval from KPMG before their collapse. “Auditors cannot be expected to do this Bank run Predictable,” an assistant professor of accounting told the FT. “But it’s better to ask an accountant about his risk assessment and proper control procedures.”
Experts in a British business newspaper wonder whether KPMG staff were independent of the banks they audited, paid enough attention to red flags and had the knowledge to assess the quality of financial information in an environment of rising interest rates.
The FED’s recent report notes weaknesses in risk management and internal audit at SVB, matters that should be assessed by the auditor. De Volkskrant reported this, citing signals from BlackRock Advisors about SVB’s “significantly” weak risk management. KPMG should make it work, experts believe.
KPMG has audited the books of all three banks for more than 20 years and is a leading auditor in the US financial industry. The company controls Wells Fargo, Citigroup, Bank of New York Mellon, “three dozen publicly traded banks” and the Federal Reserve, according to the FT. This gives the US office a total of more than $325 million in 2021.
Ex-Partners as Directors
Also notable: The Chief Executives Former KPMG partners at both Signature and First Republic. Signature appointed KPMG’s lead audit partner as chief risk officer in 2021, less than two months after signing off on that bank’s 2020 audit report. This contravenes the Securities and Exchange Commission’s (SEC) cooling-off rules for such transfers.
KPMG said it supported the audit work on SVB and Signature and did not wish to respond further to the FT on the grounds of confidentiality. A spokesperson only emphasizes the firm’s extensive experience as a financial sector auditor and says audits are conducted to “professional standards.”
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