Auditor KPMG [EDDC’s Auditors] fined £6m for a botched audit

“Tainted beancounter KPMG has been fined £6million for a botched audit of a car and motorbike insurer.

It failed to spot serious problems at Equity Red Star and should not have given it a clean bill of health, regulators said.

Equity Red Star, part of a conglomerate which insures one in four British motorcycles, lost £194million in 2010 after failing to set aside enough cash to cover payouts for claims.

KPMG should have spotted the problems and raised the alarm, the Financial Reporting Council (FRC) said.

The auditor’s partner Mark Taylor and former partner Anthony Hulse have been fined £100,000 each for their involvement.

And Douglas Morgan, a former director of Equity Red Star, has been banned from the accounting industry for two years.

Although the fines sound large they are dwarfed by KPMG’s UK revenues, which stood at £2.3billion in the last financial year.

Partners earned an average of £601,000 each.

It has been claimed that the penalties for bad behaviour are not big enough to make a difference to how the companies behave.

The FRC is being scrapped and replaced with a new authority following a damning review which found that it was failing to hold auditors to account properly.”