Unlock the Editor’s Digest for free
KPMG will be investigated by the British accounting watchdog over its audit of Ladbrokes owner Entain.
The Financial Reporting Council said on Monday it had launched an investigation into KPMG’s audit of Entain’s 2022 accounts.
Entain, the FTSE 100 group which also owns the Coral and Bwin brands, was ordered to pay a £615 million fine in 2023 as part of a deferred prosecution agreement following a years-long investigation into bribery allegations between 2011 and 2017 at the former Turkish company. unit.
That deal ended a corporate investigation by HM Revenue & Customs, but individual suspects were invited to enter plea talks with the Crown Prosecution Service in October 2024.
The new investigation announced Monday is a blow to KPMG, which has been trying to improve the quality of its audits as part of an effort to restore its reputation and reduce the costs it has incurred in fines and lawsuits over its work.
The accounting firm’s reputation had been damaged by a litany of scandals, including the 2018 collapse of its audit client Carillion, an outsourcing firm deeply involved in delivering public services.
An investigation revealed multiple failings in KPMG’s work at Carillion, while a separate tribunal found that some of its auditors had misled regulators during inspections of their work.
KPMG’s UK CEO Jon Holt has sought to improve the firm’s work, including by setting up a dedicated team to oversee its approach to bank audits, which had been heavily criticized by the FRC.
The FRC said its conduct committee had decided to launch the investigation into the Entain audit in November, but gave no details of what aspects of KPMG’s work were being investigated.
KPMG said: “We will cooperate fully with the FRC to resolve this matter as quickly as possible.”