The accountancy watchdog has told MPs it is continuing to review whether it should investigate the auditing of HBOS by accountants at KPMG.
In a letter to Andrew Tyrie, chairman of the Treasury select committee, the regulator has also pledged to set out the reasons for any decision not to formally investigate KPMG after completing the review.
The review has been triggered by the publication last month of an official report into what went wrong at HBOS. In that report it emerged that the Financial Reporting Council, which polices accountants and auditors, had decided there were “not reasonable grounds to suspect that there may have been misconduct” in relation to the auditing of the HBOS corporate loan book.
The FRC is only usually required to disclose that an investigation has begun and not why one has not been initiated. In setting out its reasons not to investigate, the regulator is addressing the public interest in the collapse of HBOS seven years ago.
The FRC’s promise to explain its decision was made in response to a letter from Tyrie. In the letter he said: “It is now essential – in the interests of public confidence – that the FRC get on with this investigation, and without delay.” On Tuesday, Tyrie said the decision not to investigate was getting “curiouser and curiouser”.
The FRC has also rebutted criticism that it had decided against an investigation without receiving all the evidence.
