The UK's accounting watchdog could launch an inquiry into how KPMG audited the books of lender HBOS in the run-up to its near collapse in the 2008 financial crisis.
The Financial Reporting Council (FRC) said it will look into whether KPMG properly considered whether HBOS was a going concern in its 2007 accounts.
It will also look at whether the accountancy firm considered "material uncertainties" about the bank's business that needed to be disclosed in other financial statements.
The FRC said it has asked its executive counsel to undertake preliminary enquiries, which comes before any decision to formally investigate the matter.
The decision by the FRC comes after a long-awaited review of the HBOS saga by the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) was published in November.
That review put the blame firmly on the bank's executives, saying they were ''ultimately responsible'' for the demise of HBOS, which had to be rescued by Lloyds and bailed out with £20.5 billion of taxpayer cash in 2008.
Treasury Select Committee chairman Andrew Tyrie said the decision by the accounting watchdog was welcome, but overdue.
Mr Tyrie said: "This is not before time. A great deal depends on the quality of audited accounts. They were found wanting during the financial crisis.
"It is essential that everybody fully understands why. That is why this investigation is so important. The committee will be keeping a close eye on it."
Simon Walker, director general of directors' lobby group the IoD, said the failure of HBOS "was one of the bleakest events in Britain's corporate history".
He added: "Shareholders and customers deserve to know what role the firm's auditors, KPMG, played in this scandal. The announcement of this long-overdue inquiry, therefore, is better late than never.
"It is absolutely right, therefore, that the FRC will look hard at HBOS's financial statements and at the appropriateness of the 'going concern' statement offered by the bank in 2007."
KPMG said: "We were pleased that the PRA and FCA's report issued last November recognised that KPMG provided a robust challenge and delivered clear warnings to HBOS and that this resulted in a more prudent approach to provisioning than would otherwise have been adopted.
"We will continue to co-operate with the FRC as it makes its preliminary enquiries. In the interests of everyone, it is now important that final conclusions are reached in a timely fashion."
After the November FCA and PRA report into HBOS up to 10 senior managers at HBOS in the run-up to its collapse could be banned from working in the City after the much-delayed publication of two damning reports into the bank's demise.
City watchdogs will look at taking potential further action against former HBOS senior management - including ex-chief executives Andy Hornby and James Crosby, as well as past chairman Lord Stevenson.
Only one former HBOS executive, Peter Cummings, has so far been formally investigated and fined.
HBOS, which was formed from the merger of Halifax and Bank of Scotland in 2001, was found to have expanded too rapidly and lent recklessly before the credit crunch and financial crisis struck.