THE ACCOUNTANCY regulator yesterday opened two probes into KPMG, one looking at its audit work with car dealership Pendragon, and another examining a partner’s investment in a client firm.
The Financial Reporting Council (FRC) said it is investigating the independence of KPMG’s financial statements for Pendragon in 2010 and 2011.
Former KPMG partner Mel Egglenton, who left the auditor in March 2010, became a non-executive director at Pendragon the following December. The FRC did not comment on whether its work will cover Egglenton’s role.
Egglenton will become FTSE-listed Pendragon’s chairman later this month.
KPMG said it “remain[s] of the view that our independence as auditor for these years was maintained”. Pendragon declined to comment.
The second FRC investigation concerns an unnamed KPMG partner who failed to promptly disclose and sell a shareholding in a company that was a client of the accountancy giant.
The partner has been disciplined for the delay, and KPMG said yesterday it accepted that it was “in clear contravention of UK Ethical Standards”.
The investigation comes weeks after KPMG was forced to resign from two audit mandates in the United States after a partner confessed to passing on inside information to a golfing buddy. The partner and his acquaintance are facing criminal charges.