Also, Mark Taylor has been severely reprimanded and has agreed to have a second partner review his audits until the end of next year. Likewise, Anthony Hulse also received a similar reprimand, while Douglas Morgan has been excluded from the Chartered Institute of Management Accountants for two years, the Financial Times reports.

“We are disappointed that aspects of our 2008 and 2009 audits were found not to have met the standards set by our regulator. Since this work was conducted we have changed our insurance audit approach considerably, including how we work with actuaries when auditing insurance claims reserves,” KPMG about the UK fine said.

“The Tribunal accepted that KPMG has taken, and continues to take, steps to improve audit performance and in its last inspection report, the FRC acknowledged our work in this area as an example of good practice.”

The company also added that it will take actions accordingly to put the ‘matters such as this to rest’ as soon as possible.

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October 7, 2013 : Clawing back bonuses from directors could be made easier as the U.K’s accounting regulator has said it may overhaul rules for corporate pay and introduce measures to make it easier to seize executive bonuses. The Financial Reporting Council (FRC) has published a consultation on possible amendments to the UK Corporate Governance Code on executive remuneration, the FRC led by chairman Baroness Hogg, has begun a consultation in the wake of new legislation, the Large and Medium Sized Companies and Groups (Accounts and Reports) Amendment Regulations 2013 which came into effect on October 1.

This comes after the FRC was asked by the government to consult on the code once its legislation on voting and reporting of executive pay remuneration has been finalised. On the “clawback” of executive payments the FRC said it will look at bonus clawback arrangements, executives sitting as non-executives on peer remuneration committees, and steps to take when pay is not agreed by majority vote. The current code is not clear on how boards should respond if they fail to obtain a substantial majority in support of a resolution on remuneration, despite general guidance that the chairman should ensure “effective communication with shareholders”. Regulators and government are contemplating for more than one year on ways to better align remuneration with company performance and hand more power to shareholders.

FRC Chairman Baroness Hogg said “The government’s new legislation underlines the importance of boards and investors engaging on director’s remuneration. The FRC is undertaking this consultation to understand if there is a case for changes to the code”.  “There is no presumption on the FRC’s part as to the outcome. All interested parties will have an opportunity to make their views known before we reach a final decision”

“Institutions have already taken a harder line on clawbacks in recent years, so any changes would be a catch-up with existing good practice” said Carol Shutkever, a lawyer at Herbert Smith LLP.

Industry groups can offer their views on the changes, the FRC said. If changes to the code are proposed there will be a further consultation early in the New Year, with the new rules coming into effect from October 1, 2014.

Lloyds directors face the heat

Earlier in February 2013, “The Telegraph” reported that directors of Lloyds Banking Group would face cut in their pay as a result of its spiralling payment protection insurance (PPI) mis-selling provisions. The Lloyds board chaired by Sir Win Bischoff, decided to reduce the bonuses of 13 former directors and senior managers for a second time, the decision would impact its stalwarts including ex-Chief Executive, Eric Daniels, Helen Weir, former Retail Banking Chief whose bonuses were cut by 25 percent. Lloyds Bank became the first British bank since the 2008 financial crisis to exercise a “clawback” option on its executives. The 2012 clawbacks were based on £ 3.2bn of PPI mis-selling provisions booked in 2011.

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