WASHINGTON, D.C. - The Office of the Comptroller of the
Currency (OCC) today announced a public hearing before an Administrative Law
Judge beginning Wednesday, November 10, 2004, concerning an enforcement
proceeding against Grant Thornton LLP, former external auditor for the failed
First National Bank of Keystone, Keystone, West Virginia (Bank).
The OCC is seeking a cease and desist order that would
require Grant Thornton to perform various enhanced auditing practices and
procedures whenever it audits insured depository institutions. The order would also require the firm to
adopt minimum levels of skill and experience for personnel who conduct audits
of insured depository institutions and would require the firm to more closely
supervise the work performed by the audit personnel assigned to banks.
The agency also seeks the assessment of a $300,000 civil
money penalty against Grant Thornton.
The proceeding arises from Grant Thornton’s audit of the
year-end 1998 financial statements of Keystone. In April of 1999, Grant Thornton issued an unqualified audit
opinion stating that the bank’s financial statements were fairly presented in
conformity with Generally Accepted Accounting Principles. Less than five months after Grant Thornton
issued its audit opinion, the OCC discovered that Keystone had overstated its
assets by more than $500 million. The
OCC closed the bank on September 1, 1999, and named the Federal Deposit
Insurance Corporation (FDIC) receiver.
The OCC has charged that Grant Thornton acted recklessly
with respect to its performance of the
audit. The agency believes that
if Grant Thornton had performed the audit in accordance with Generally Accepted
Auditing Standards it would have discovered the fraudulent misstatement of
assets and averted additional losses to the Bank and the Bank Insurance Fund of
the FDIC.
The hearing will commence at 9 a.m. in Courtroom 9 of the
United States Court of Federal Claims building, 717 Madison Place, NW, 3rd
Floor, Washington, D.C. OCC
administrative hearings are open to the public as required by federal law.
The OCC charters, regulates
and examines approximately 2,000 national banks and 51 federal branches of
foreign banks in the U.S., accounting for more than 56 percent of the nation’s
banking assets. Its mission is to ensure a safe and sound and competitive
national banking system that supports the citizens, communities and economy of
the United States.