Insurer Aspen switches to E&Y after accounting weaknesses emerge

Diving Brief:

  • Bermuda-based Aspen Insurance Holdings Ltd. has asked Ernst & Young to step in as auditor, replacing KPMG which resigned as Aspen’s independent accounting firm on June 8, according to a filing. Monday with the SEC.

  • E&Y’s appointment as Aspen’s 2022 public auditor comes after the insurer previously disclosed “significant weaknesses in internal controls over financial reporting,” according to the filing filed by Aspen’s chief financial officer, Christopher Coleman.

  • “The Company’s Audit Committee and Board of Directors have discussed the subject of these material weaknesses and associated remediation plans with KPMG and have authorized KPMG to fully respond to EY’s requests regarding these matters,” the statement said. case.

Overview of the dive:

The move to E&Y comes after Aspen discovered issues related in part to its currency revaluation process and translation controls that led to an overstatement in its reporting of its underwriting premiums receivable and an understatement of its foreign exchange losses, according to a May 16, 2022 filing with the SEC. Aspen has launched a plan to improve its internal controls by taking steps such as implementing new credit checks and hiring additional accounting and operational resources, the filing said.

Audit firms have faced intense scrutiny from clients and regulators in recent years.

Earlier this week, the UK The Financial Reporting Council (FRC) announces sanctions against KPMG LLP, a former KPMG partner and four former KPMG employees in connection with false and misleading information provided in two audits, including one carried out by KPMG for Regenersis for a period ending June 30, 2014 and a second relating to Carillon’s 2016 financial statements. KPMG was fined £14.4 million, or approximately US$17 million, which was reduced to reflect the company’s self-declaration, cooperation and admissions, according to a Monday statement from the FRC.

KPMG did not respond to a request for comment.

KPMG isn’t the only Big Four company to have come under fire recently. Last monthSecurities and Exchange Commission (SEC) a fine Ernst & Young $100 million for cheating by its auditors on ethics reviews and for hiding evidence of wrongdoing from the agency’s law enforcement division. The sanction is the heaviest ever imposed on an audit firm, the SEC said on Tuesday. EY said it was complying with the requirements of the order and added that its response to “unacceptable past behavior has been thorough, extensive and effective”.