Silicon Valley Bank collapse: KPMG stands by its audit of SVB, Signature Bank amid backlash

Accounting firm KPMG, one of the ‘Big 4’, that gave a clean chit to Silicon Valley Bank and Signature Bank, days before they collapsed, has said that it stands by its audits of the lenders. KPMG has been facing a growing backlash for not red-flagging the lenders that collapsed only days later after its audit.

KPMG’s US boss said that it stands behind its audits of SVB and Signature Bank. Paul Knopp said that the audit work considered all facts available at the time the reports were issued, and that market-driven events in the following days led to the banks’ crises, according to a report in Financial Times.

Knopp, speaking at an event at the NYU Stern Centre for Sustainable Business on Tuesday, said, “As we take into account everything we know today… We stand behind the reports we issued and we think we followed all professional standards…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,” further adding that actions taken in the month of March set off another set of reactions leading to the closure of the banks.

Knopp’s response comes after questions were raised against KPMG. “KPMG issued a clean audit report on the 31 December 2022 accounts of Silicon Valley Bank on 24 February 2023. That's another negligence claim in the making and another addition to the grand catalogue of audit failures. Audit reform is massively overdue,” said Professor of Accounting Practice, Sheffield University Richard Murphy on Twitter, while another user said, “KPMG gave SVB, Signature Bank clean bill of health weeks before collapse. Is KPMG a small firm? Did they not have the required experience?”

“We need a Royal Commission into the Big Consulting Firms. The bollocks they drive is next level. #SVBCollapse after KPMG gave them a clean bill of health. FFS,” said a user, while another added, “What KPMG knew about the two banks’ financial situation and what it missed will likely be the subject of regulatory scrutiny and lawsuits”.

“A lot has been written and said about SVB’s failure and what led to that situation. But not much has been said about audit and the clean chit given to them. Silicon Valley Bank failed just 14 days after KPMG gave the lender a clean bill of health. This raises concerns about the credibility of such audit firms and the processes involved,” said a user on LinkedIn, while another jibed, “Ah, the Big Four accounting firms are as dependable as ever.”

The accounting firm has been auditing SVB’s parent company since 1994 and Signature Bank for 22 years, the report added. It signed off SVB’s audit report on February 24, two weeks before the bank was seized by regulators, while the Signature Bank report was signed off on March 1, 11 days before it was seized.

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