Accountancy giant KPMG in the UK is facing a potential investigation over the audit work that gave HBOS a clean bill of health in the run-up to its collapse.
The UK's Financial Reporting Council confirmed it would consider launching an investigation of KPMG's role.
This follows last week's damning Parliamentary Commission report on HBOS and once the Financial Conduct Authority presents its findings on the bank's failure in the autumn.
It comes as a further blow to KPMG after it was forced to quit yesterday as auditor of two US firms - nutritional products group Herbalife and footwear maker Skechers - amid an FBI investigation into alleged insider trading involving a former employee.
KPMG, which audited HBOS's accounts throughout the years leading up to the financial crisis, said: "We stand by the quality of our audit work at HBOS."
KPMG said last night it had resigned as auditor of two US corporations amid an FBI investigation into insider trading allegations involving leaked information and a former senior partner.
The two California-based companies - nutritional products group Herbalife and footwear maker Skechers USA - said separately last night that KPMG had quit as their auditor in connection with the leaks.
The FBI's Los Angeles office is investigating the matter, according to a source familiar with the situation.
Skechers chief financial officer David Weinberg told Reuters in an interview that Scott London had been the lead auditor for Skechers and had resigned after the leaks. Weinberg said that London had admitted to sharing inside information.
A KPMG spokesman confirmed that London was the partner who had resigned from the firm. London was not immediately available for comment. The 50-year-old California native worked at KPMG for 29 years.
Herbalife said in a statement that KPMG's resignation had nothing to do with the company's accounting practices or the integrity of its management - issues called into question by the high-stakes drama between hedge fund titans Bill Ackman and Carl Icahn over the company.
KPMG said in a statement earlier this week that it had resigned as the outside auditor for two clients due to the actions of a senior partner, who was in charge of the audit practice in its Los Angeles business unit.
The announcement did not identify the partner or the companies involved. It said the unidentified partner provided inside information about its clients to someone who had used that information in stock trading.
"The partner was immediately separated from the firm," KPMG said in its statement. "This individual violated the firm's rigorous policies and protections, betrayed the trust of clients as well as colleagues, and acted with deliberate disregard for KPMG's long-standing culture of professionalism and integrity,'' it added.
The Public Company Accounting Oversight Board (PCAOB), which polices audit firms, proposed in 2011 that the firms be required to disclose the names of individual engagement partners in audit reports, as they must in some other countries. That proposal has not been made a US rule.
Some audit critics said it should be to make auditing more transparent, though audit firms have resisted this idea for a variety of reasons.
KPMG is the smallest of the Big Four global accounting and audit firms. It reported 2012 revenue of $23 billion, up 1.4% from the year before. The other three firms are PricewaterhouseCoopers, Deloitte and Ernst & Young. All are US-based and operate affiliate networks around the world.
Any controversy over KPMG's dealings could hurt the firm's reputation. In 2005, KPMG narrowly avoided a criminal indictment by agreeing to pay $456m in a deferred prosecution settlement with US authorities over its sale of tax shelters.
Three years earlier, smaller rival Arthur Andersen collapsed over its auditing work for energy company Enron Corporation.
In addition, KPMG partners were the only ones so far to have been sued by the US Securities and Exchange Commission in connection with the global financial crisis.
