KPMG Gave First Republic a Clean Audit Weeks Before Bailout (1) – Bloomberg Tax

By Amanda Iacone
First Republic Bank—which came back from the brink Thursday thanks to a $30 billion emergency bailout from other lenders—shares a link with two other banks that foundered within the past week. All three used KPMG LLP as their auditor—and each had recently received a clean bill of health from the firm.
First Republic’s reprieve— from a combination of megabanks including JPMorgan Chase & Co., Bank of America Corp., Citigroup Inc. and Wells Fargo & Co.—comes after its stock was hammered for days, wiping away billions in market value, sending customers fleeing.
KPMG signed off on the institution’s 2022 financial statements on Feb. 28 but didn’t raise any red flags that the bank’s survival was at risk.
The Big Four accounting firm declined to comment on the bank’s rescue. KPMG has previously said that its auditors can’t predict “unanticipated events or actions taken by management” that occur after its report to investors.
Auditors must consider a company’s viability and the chances that it might not be able to continue as a going concern in the year ahead as part of the annual check of corporate accounts. Auditors issue such warnings sparingly because they have the potential to compound a struggling company’s problems.
KPMG similarly issued clean audit opinions for clients Signature Bank, a New York-based regional bank, and California-based Silicon Valley Bank, which regulators shuttered over the weekend.
First Republic said March 12 that it had bolstered its access to cash and financing to fund its operations and touted strong liquidity and capital reserves.
Like Signature before its collapse, First Republic also is led by a KPMG alumnus. CEO and President Michael Roffler spent 16 years at the accounting firm, including five as an audit partner, according to his executive biography.
To contact the reporter on this story: Amanda Iacone in Washington at
To contact the editor responsible for this story: Jeff Harrington at
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