Accounting Regulator Investigates KPMG's Audit of Equity Red Star
THE ACCOUNTANCY and Actuarial Discipline Board (AADB) has begun an investigation into KPMG's audit of Equity Red Star, a motor and home insurer.
The accounting watchdog said it is investigating the conduct of KPMG's audit division and individual ICAEW and CIMA members during the preparation and audit of reports and accounts for Equity Red Star Motor Syndicate 218, for the years ended 31 December 2007, 2008 and 2009. The investigation has a "particular reference" to technical provisions, the AADB said.
KPMG said it was confident its audit work for the Equity Red Star syndicate "met the relevant professional standards". The AADB, which is part of the Financial Reporting Council, has also begun an investigation into the conduct of members of the Institute and Faculty of Actuaries, relating to actuarial advice.
The advice was provided to Equity Syndicate Management Limited - a managing agent and member of Lloyds Syndicate 218, which trades as Equity Red Star.
In January, Equity Red Star admitted to two charges of "detrimental conduct" following an investigation by the insurance market syndicate organisation Lloyd's of London.
The charges related to failures in meeting market requirements for "reserving" procedures and keeping track of higher claims pay-outs.