The UK's accountancy watchdog has asked for more powers following an investigation into the 2007 and 2008 audits of HBOS.
The Financial Reporting Council has written to the chairman of the Treasury Select Committee asking for its assistance in passing legislation to address this.
In September the FRC closed its investigation into KPMG's auditing of HBOS, clearing the company of misconduct in relation to its work with the lender.
It came to the conclusion KPMG's audit of HBOS's results did not fall "significantly short of the standards reasonably to be expected".
This morning (30 November) the regulator has published a report into the investigation in which it accepted that it was not "sufficiently proactive" in making enquiries about the HBOS audit and relied too heavily on the work of the then regulator, the Financial Services Authority.
In a letter to Nicky Morgan, the chairman of the Treasury Select Committee, the chief executive of the FRC Stephen Haddrill has said the regulator has learnt from this process.
He said: "It is our view that accountants in public interest roles should be subject to a similar threshold of accountability as auditors now are to protect the public interest. We would appreciate your support for this and, if necessary, legislation."
Mr Haddrill said the FRC had not been proactive because it was concerned its limited powers to get information from companies meant it should wait for the FSA to finish its work.
But he said: "However, these other investigations took much longer than initially expected and, therefore, a substantial gap in inquiries in relation to audit opened up whilst the FSA and FCA/PRA work was underway.
"FRC investigations should be undertaken in parallel so that there is no unnecessary delay in reaching conclusions, and so our evidence can be fed into other inquiries if appropriate. We have since adopted this approach.
"As the competent authority, we now have additional powers to obtain information and we have invested in a significant increase in the size of our enforcement team."
Mr Haddrill also acknowledged concerns that the FRC employs too many people with a background in the major accounting firms it is tasked with regulating.
He said there are already rules in place preventing anyone who has practised as an auditor in the past three years from being involved in regulatory decisions but he said the FRC is now conducting a review into this issue.
HBOS was bought by Lloyds TSB in September 2008 but less than a month later had to draw down on Bank of England emergency liquidity assistance as customers withdrew deposits.
There had been concerns it was under severe strain for months but just seven months previously KPMG had given an unqualified audit opinion on its December 2007 financial statements.
In September the FRC ruled KPMG's assessment of the bank's health was "not unreasonable at the time".
damian.fantato@ft.com
