KPMG Under Scrutiny From Accounting Watchdog FRC

Entain, owner of giant brands such as Coral and Ladbrokes, has faced a lot of scrutiny and was even fined over £600m in 2023 after an investigation into bribery at the company’s Turkish unit.

The FRC has not disclosed the specific parts of KPMG’s work under investigation, but we know it relates to the 2022 accounts. The regulator has the option to impose significant penalties if needed. KPMG has been the auditor since 2018 and agreed that they would cooperate with the FRC’s investigation.

KPMG has already faced some criticism after a tribunal found that auditors had misled regulators regarding the 2018 collapse of Carillon. The accounting company has seen fines levied for a lot of high-end clients including Rolls-Royce and BNY Mellon.

KPMG’s UK chief executive, Jon Holt, promised improved audit quality in the wake of the criticism from FRC. The company has also laid off around 330 employees in recent years in spite of struggling with the aforementioned issues. They also cut their workforce in the consultancy and deals divisions of the company.

They actually had previously increased employee numbers during COVID, but the scaling back is said to be to align with economic conditions. The whole of the accounting industry is under scrutiny from the FRC which continues to audit all of the Big Four firms: Deloitte, Ernst & Young, PricewaterhouseCoopers (PwC), and KPMG.

Entain faces potential reputational damage as a result of the investigation. They have already been accused of failing to have the right procedures in place to prevent people within the business from taking bribes. As recently as December 2023, the company reached a deferred prosecution agreement (DPA) with the CPS. This new investigation could prove to be a big blow to the company.