KPMG under investigation over Rolls-Royce audit

The Financial Reporting Council (FRC) has started an investigation under the Audit Enforcement Procedure into KPMG Audit involving its work with aero engine giant Rolls-Royce.

The Financial Reporting Council (FRC) will probe the accountancy giant’s oversight of Rolls-Royce’s financial statements covering four years from 2010 to 2013.

The FRC said in a statement: “The FRC has commenced an investigation under the Audit Enforcement Procedure into the conduct of KPMG Audit Plc, in relation to the audit of the financial statements of Rolls-Royce Group plc for the year ended 31 December 2010 and of Rolls-Royce Holdings plc for the years ended 31 December 2011 to 31 December 2013.

“The decision to investigate follows the SFO announcement on 17 January 2017 of a Deferred Prosecution Agreement between the SFO and Rolls-Royce which relates to offences including conspiracy to corrupt and a failure to prevent bribery.”

The news follows Rolls-Royce’s settlement of £671m with the Serious Fraud Office in January over bribery and corruption involving intermediaries in overseas markets such as Indonesia and China.

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.”

Rolls Royce employs more than 1,000 people at two sites in Barnoldswick in Lancashire.