The Accountancy and Actuarial Discipline Board (AADB) will probe KPMG in relation to BAE’s payments through offshore companies between 1997 and 2007.
The investigation follows on from BAE’s long-running corruption case linked to Saudi Arabian and Tasmanian arms deals, which the firm settled in February after admitting in a US court to conspiring to make false statements and paying £285m in fines.
The AADB named the three front companies – Red Diamond, Poseidon and Novelmight – used by BAE to make payments to foreign officials. The watchdog said it will investigate the “status, operation or disclosability” of the firms in KPMG’s work.
A KPMG spokesman said of the investigation: “The firm does not believe there has been any act of misconduct. It will of course be co-operating fully with AADB to ensure the matter is brought to a swift conclusion.”
If the AADB find evidence of misconduct it could hold a public tribunal, which would have the power to dole out unlimited fines and revoke licences to practice.