KPMG, the world's third biggest accounting firm, is being sued for $1bn (£692m) by the liquidators of New Century Financial, the collapsed US subprime lender, in the first big case against an auditor to emerge in the global financial crisis.

In a court filing in New York yesterday, lawyers for the liquidators claim KPMG was responsible for New Century's collapse because it allowed the lender to understate the size of its bad loan problem - and even "silenced" KPMG experts who raised red flags.