(Reuters) - Britain's accounting watchdog said on Wednesday KPMG, one of the world's "Big Four" accounting firms, and one of its partners had admitted to misconduct in relation to their 2011 compliance reports for a unit of Bank of New York Mellon Corp (N:BK) and its London branch.
The Financial Reporting Council (FRC) said KPMG and partner Richard Hinton admitted to falling short of FRC standards in the investigation that began in June 2015.
A disciplinary tribunal will be convened to decide what sanctions should be imposed, the FRC said.
KPMG and Hinton failed to give adequate consideration on whether the records of custody relationships maintained by the BNY Mellon Group were compliant to certain rules, the watchdog said.
They also failed to undertake sufficient audit procedures to support the opinions set out in 2011 client asset reports made to the Financial Conduct Authority (FCA), the FRC said.
The FCA, in 2015, fined BNY Mellon 126 million pounds for failing to keep customer money safe during the financial crisis. https://reut.rs/2OC7V4y
The FRC is separately also investigating KPMG's audit of drinks firm Conviviality's financial statements, after highlighting an "unacceptable deterioration" in the auditor's work with top British firms. KPMG is also being investigated over collapsed construction firm Carillion (L:CLLN).
The watchdog fined KPMG this year 3 million pounds for misconduct related to auditing of British fashion retailer Ted Baker's (L:TED) accounts.
PwC, EY and Deloitte have also caught the attention of the FRC, as shock corporate failures including Carillion and Poundworld raised questions over standards in the auditing industry.
