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‘Going concern” is such an odd term to attach to a company. Where is it going exactly? And what concerns does it have, apart from the usual stuff: global warming, Donald Trump and cats that look like Kim Kardashian?

So, what a treat that the Financial Reporting Council has popped up to clarify. It’s decided that 2007 vintage HBOS was every bit a going concern, on the quite reasonable grounds that it was going bust. It was quite a concern, too, as a £20 billion taxpayer bailout implied.

So there you have it: the reason for the FRC’s “closure” of its inquiry into the auditing prowess of KPMG, the accountant now embroiled in the Gupta scandal. The accountancy watchdog found HBOS’s managers “did not expect market conditions to worsen and judged that it would be able to fund itself”, while KPMG “considered and accepted this conclusion”. And such judgments were not “unreasonable at the time”, even if the bank collapsed months later. So, no case to answer M’lud.

And who’s the least surprised about any of that? Precisely no one. The FRC only started its inquiry into whether KPMG was right to sign off HBOS 2007 accounts on a “going concern” basis in January 2016 — nine years later. And the FRC’s line that it was waiting for November 2015’s HBOS report from the Financial Conduct Authority and Prudential Regulation Authority does rewrite history a bit — as the report itself makes clear.

It says the FCA and PRA “wrote to the FRC inviting it to consider whether there were grounds to investigate KPMG and/or senior KPMG people” over “the audits of HBOS’s financial statements for 2007 and 2008 . . . The FRC carried out a review into these matters and advised the criteria for commencing an investigation were not met.”

Indeed, it took the intervention of Andrew Tyrie, then the chairman of the Treasury committee, to prod the somnolent FRC into action. Until then, its sole look at HBOS was an inquiry in 2013 into the audit of “loan loss provisions”. Again, no case to answer. So, for the FRC to have now found against KPMG would have amounted to an admission that it was wrong not to have investigated earlier. And all from a regulator chaired by Sir Win Bischoff: ex-chairman of HBOS’s buyer, Lloyds Banking Group.

True, hindsight is 20:20. And maybe KPMG’s HBOS audit only looks hopeless now. But Northern Rock did go bust in 2007, which might have rung alarm bells about banks reliant on wholesale funding. And, as the HBOS report makes clear, KPMG itself was warning the bank in July 2007 about signs of a “reduction in credit quality”, even if it did not “directly review” whether the bank’s “good” loan book was “correctly assessed and categorised”.

Still, that’s KPMG off the hook, yesterday talking up its “robust” HBOS audit. So, it’s still only Peter Cummings who’s taken the rap for apparently bringing down the bank all by himself. Even the FRC must find that implausible.

Alistair Osborne

Times Business Commentary