IAG’s Equity faces auditing investigation

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12 March 2012

The past troubles at IAG’s UK subsidiary, Equity Red Star, continue to haunt the business with its auditor now under investigation.

The UK’s Accountancy and Actuarial Discipline Board (AADB) has launched an investigation into KPMG’s auditing procedures at the Lloyd’s syndicate.

The AADB says its investigation will focus on the provision of actuarial advice in relation to reserving at the syndicate between 2007 and 2009.

KPMG has said it will co-operate fully with the investigation.

“We are confident our audit work in relation to the Equity Red Star syndicate met the relevant professional standards,” a KPMG spokesman said.

This latest investigation follows the recent censure of Equity by Lloyd’s over its reserving and record-keeping.

The Lloyd’s Enforcement Board found the company failed to “comply with Lloyd’s requirements for the maintenance of systems and controls procedures and/or for the maintenance of a high standard of documentation in relation to its reserving processes”.

The Lloyd’s investigation resulted in two charges of detrimental conduct against the company in relation to the 2008/09 financial year.