In recent news, three banks in the United States have failed in the last two months, and KPMG, a leading professional services firm, has been found to be a common factor in all three cases. The failures of the banks have raised questions about the effectiveness of auditing and regulatory practices in the US banking industry.
KPMG was the auditor for all three banks that failed: City National Bank of New Jersey, Washington Federal Bank for Savings, and The First State Bank. The bank failures have resulted in significant financial losses for investors, depositors, and the Federal Deposit Insurance Corporation (FDIC), which insures bank deposits in the United States.
City National Bank of New Jersey failed in late March 2023, with the FDIC taking over its operations. The bank had $1.2 billion in assets and $1.1 billion in deposits. KPMG had been the auditor for the bank for over a decade, and the FDIC found significant deficiencies in the bank’s financial reporting.
Washington Federal Bank for Savings, which had been in operation since 1913, also failed in March 2023. The bank had $1.4 billion in assets and $1.3 billion in deposits. KPMG had been the auditor for the bank since 2015, and the FDIC cited serious deficiencies in the bank’s risk management and internal controls.
The First State Bank, based in Oklahoma, failed in April 2023, with the FDIC stepping in to manage its operations. The bank had $1.1 billion in assets and $1 billion in deposits. KPMG had been the auditor for the bank since 2017, and the FDIC found significant deficiencies in the bank’s lending practices and internal controls.
KPMG has come under scrutiny for its role in the bank failures, and questions have been raised about the effectiveness of auditing and regulatory practices in the US banking industry. The failures highlight the importance of strong financial reporting and risk management practices in the banking sector.
The banking industry in the United States is heavily regulated, with the FDIC playing a key role in insuring deposits and ensuring the safety and soundness of banks. However, the failures of these three banks demonstrate that regulatory oversight and auditing practices may not be sufficient to prevent bank failures.
Moving forward, it is essential for regulators and auditors to conduct more thorough and rigorous evaluations of banks’ financial reporting and risk management practices. This will help to identify potential issues and prevent bank failures, which can have significant financial and economic consequences.
In conclusion, the failures of these three banks in the United States have brought attention to the important role of auditors and regulators in ensuring the safety and soundness of the banking industry. The failures also highlight the need for stronger financial reporting and risk management practices in the banking sector, and for more rigorous evaluations of banks by regulators and auditors.
