ABSTRACT
This chapter focuses on the failure of the fifth largest UK bank- HBOS, and the role played by its only auditor, KPMG, who provided consistent unqualified audit reports and no warnings of the impending risks, or the serious and systemic failure of risk management inside the firm. The parliamentary investigation discovered simple and pervasive failures in risk management which would have been easily discovered through a quality audit. The chapter highlights the evidence from a key early whistleblower, who raised serious concerns about HBOS risk controls but was dismissed by management, with the collusion of KPMG. It focuses on a generic interview with the KPMG Head of Risk and Quality on its culture, ethics and audit quality and independence controls. It also highlights the lessons and implications of this research for the study of accounting, and identify new avenues for research.
