KPMG's Rolls-Royce audit sign-offs to be scrutinised by accounting watchdog in wake of bribery scandal

 
Oliver Gill
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The Financial Reporting Council is at the first stage of its investigation into KPMG (Source: Getty)

KPMG will be probed by the UK's accounting watchdog over its audit of Rolls-Royce after the engineering firm admitted to bribery and corruption allegations earlier this year.

Year-end audit sign-offs made between 2010 and 2013 by the accountancy giant will be investigated by the Financial Reporting Council (FRC), it was announced today.

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In January, Rolls-Royce agreed to pay £671m in penalties to investigators, of which £497m was paid to the UK's Serious Fraud Office. It also entered into a deferred prosecution agreement with the US department of justice and a leniency agreement with Brazil's Ministerio Publico Federal.

The FRC has kicked off the first stage of its investigation to gather data on KPMG's actions. Once it has completed this stage it will make a decision as to whether to refer the case to an independent tribunal.

If the watchdog does make such a referral, it will be up to the tribunal to hear the case and apply sanctions if required.

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KPMG said in a statement: “It is important that regulators acting in the public interest should review high profile issues. We will co-operate fully with the FRC’s investigation, which follows the SFO’s investigations into Rolls-Royce.

We are confident in the quality of all the audit work we have completed for Rolls-Royce, including the 2010-2013 period the FRC is considering.

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