Accounting watchdog to investigate KPMG over 2022 Entain audit

The Financial Reporting Council (FRC) has begun an investigation in relation to audits conducted by KPMG on Entain’s full-year 2022 financial results.

The investigation will not concern Entain, although the operator’s shares dipped 2% in early morning trading before bouncing back.

The body confirmed its probe today, 20 January, with the decision having been agreed at a FRC Conduct Committee meeting on 21 November 2024.

The investigation will be carried out by the FRC’s Enforcement Division under its Audit Enforcement Procedure.

The FRC is a UK regulator that oversees auditors, accountants and actuaries. It is not a government agency, but it is sponsored by the Department for Business and Trade.

The investigation into KPMG, one of the ‘Big Four’ accounting organisations, comes after the FRC fined the firm £21m in October 2023 over its involvement with British construction giant Carillion before its liquidation in 2018.

KPMG was originally fined £30m split over two cases, which was ultimately reduced to £21m to reflect the auditor’s “co-operation and admissions”.

KPMG had audited Carillion’s financial statements for 2014, 2015 and 2016, with the FRC stating it had provided an “unqualified audit opinion that the financial statements gave a true and fair view of Carillion’s affairs”.

The FRC found KPMG had failed to gather sufficient information and evidence, and had been unable to “conduct its audit work with an adequate degree of professional scepticism”.

The FRC investigation will not focus on Entain and is solely directed at KPMG.

An FRC statement read: “This press notice concerns the opening of an investigation into one or more statutory auditor(s) and/or statutory audit firm(s).

“The investigation does not relate to any persons or entities other than the relevant statutory auditor(s) and/or statutory audit firm(s) and it would not be fair to treat any part of this announcement as constituting or evidencing an investigation into any other persons or entities.”

A KPMG spokesman said: “We will cooperate fully with the FRC to conclude this matter as quickly as possible.”

EGR contacted Entain but the FTSE 100 firm declined to comment on the matter.

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 The Financial Reporting Council to look into ‘Big Four’ auditing firm less than 18 months after fining KPMG £21m
The post Accounting watchdog to investigate KPMG over 2022 Entain audit first appeared on EGR Intel.