This is how much KPMG has been fined over its audit of the Co-op Bank in 2009

KPMG has been hit with a £5m fine. The Financial Reporting Council also said, following KPMG’s admission of misconduct, a number of the accountancy giant’s audits over the next three years will be subject to an “additional review” by an audit quality team.

KPMG’s fine has been discounted for settlement to £4m and the firm will also pay £500,000 towards the FRC’s costs. The partner in question, Andrew Walker, has been fined £125,000 - discounted for settlement to £100,000 - and severely reprimanded.

The misconduct occurred shortly after the Co-op Bank’s merger with the Britannia Building Society. KPMG and Mr Walker both admitted their conduct fell significantly short of the standards reasonably to be expected of an audit firm and an audit partner in two key areas.

They were the audit of fair value adjustments in relation to loans within the commercial book acquired from Britannia, as well as liabilities under a series of loan notes which were also acquired at the same time.

The FRC said that KPMG and Mr Walker failed to obtain sufficient appropriate audit evidence, failed to exercise sufficient professional scepticism and failed to inform Co-op Bank that the disclosure of the expected lives of the notes in the financial statements was not adequate.