KPMG stands by audits of Silicon Valley Bank and Signature Bank


KPMG’s US boss said it stood behind its audits of Silicon Valley Bank and Signature Bank, which collapsed within days of putting out annual reports certified by the Big Four accounting firm.

Paul Knopp said its audit work considered all the facts available at the time the reports were issued, and that “market-driven events” in the intervening days led to the banks’ failures.

KPMG has audited SVB’s parent company since 1994 and Signature Bank since its inception 22 years ago.

Ahead of the publication of an annual report, auditors are required to assess whether there is substantial doubt about a company’s ability to survive over the next year. An audit opinion included in the report would have to include a “going concern” warning if there was such a doubt, but there was no such warning at either bank.

KPMG signed its audit opinion on SVB on February 24, exactly two weeks before the bank was seized by regulators in the wake of a bank run. The audit opinion on Signature is dated March 1, 11 days before it was seized. Depositors took flight after focusing on losses in the banks’ portfolios of fixed-income securities and the low proportion of deposits that were covered by a government guarantee.

“As we take into account everything we know today . . . we stand behind the reports we issued and we think we followed all professional standards,” Knopp, chief executive of KPMG in the US, said at an event at the NYU Stern Center for Sustainable Business on Tuesday.

“You have a responsibility until the day you issue the audit report to consider all facts that you know, so we absolutely did do that. But what you can’t know with certainty is what might happen after that audit report is issued,” he said, adding that this could include “market-driven” events and the “unpredictable” reactions of customers.

“There were actions taken in the month of March that set off another set of reactions that led to those two institutions being closed.”

Sandy Peters, head of global advocacy at the CFA Institute, a professional body for investors, said regulators could scrutinise the work KPMG did to back its audit opinion, including why it decided not to include a going concern warning.

SVB’s reliance on customers in the tech industry could also raise questions about whether its financial reports properly reflected that concentration risk, she said. “People will want to know of the auditor, do you have a going concern memo in the audit file? What is the evidence you took for that?”

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