KPMG admits misconduct in connection BNY Mellon
September 19, 2018

The Financial Reporting Council (FRC) has announced this morning that KPMG Audit Plc (KPMG) and Richard Hinton (a Partner) have admitted misconduct under the FRC's Accountancy Scheme in relation to their reports to the Financial Conduct Authority (FCA) on compliance by The Bank of New York Mellon (International) Limited (MIL) and The Bank of New York Mellon London Branch (MLB) with the FCA's Client Assets Sourcebook (CASS) for the year ended December 31 2011.

Accordingly, a formal complaint has been delivered by the FRC and a disciplinary tribunal will be convened to decide what sanctions should be imposed.

KPMG and Mr Hinton have admitted that their conduct fell significantly short of the standards to be reasonably expect of a member firm and member (respectively) of the Institute of Chartered Accountants of England and Wales (ICAEW), in that they:

failed to give adequate consideration as to whether the records of custody relationships maintained by the BNY Mellon Group were compliant with the CASS rules and/or as to the implications for CASS compliance by MLB and MIL of the Global Securities Processing platform being maintained and operated by the BNY Mellon Group on a global group (rather than individual firm) basis;

and as a result failed to undertake sufficient audit procedures to support the opinions set out in the 2011 client asset reports made to the FCA.

The FRC says the allegations relate to custody assets held by MIL and MLB worth, at their peak, over 1 trillion. It is not alleged that clients lost money or assets as a result of the misconduct.

The FRC's investigation was opened in June 2015 following a referral from the FCA. A date for the tribunal hearing will be announced in due course.





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The Financial Reporting Council (FRC) has announced this morning that KPMG Audit Plc (KPMG) and Richard Hinton (a Partner) have admitted misconduct under the FRC's Accountancy Scheme in relation to their reports to the Financial Conduct Authority (FCA) on compliance by The Bank of New York Mellon (International) Limited (MIL) and The Bank of New York Mellon London Branch (MLB) with the FCA's Client Assets Sourcebook (CASS) for the year ended December 31 2011.

Accordingly, a formal complaint has been delivered by the FRC and a disciplinary tribunal will be convened to decide what sanctions should be imposed.

KPMG and Mr Hinton have admitted that their conduct fell significantly short of the standards to be reasonably expect of a member firm and member (respectively) of the Institute of Chartered Accountants of England and Wales (ICAEW), in that they:

failed to give adequate consideration as to whether the records of custody relationships maintained by the BNY Mellon Group were compliant with the CASS rules and/or as to the implications for CASS compliance by MLB and MIL of the Global Securities Processing platform being maintained and operated by the BNY Mellon Group on a global group (rather than individual firm) basis;

and as a result failed to undertake sufficient audit procedures to support the opinions set out in the 2011 client asset reports made to the FCA.

The FRC says the allegations relate to custody assets held by MIL and MLB worth, at their peak, over 1 trillion. It is not alleged that clients lost money or assets as a result of the misconduct.

The FRC's investigation was opened in June 2015 following a referral from the FCA. A date for the tribunal hearing will be announced in due course.



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