Business

KPMG probed by UK accounting watchdog over Entain audit

FRC investigation follows allegations of bribery at Ladbrokes owner’s former Turkish unit

KPMG is being investigated by the UK’s accounting watchdog over its auditing of Ladbrokes owner Entain, delivering a fresh setback to the Big Four firm which has been trying to clear a backlog of investigations into its work.
KPMG is being investigated by the UK’s accounting watchdog over its auditing of Ladbrokes owner Entain, delivering a fresh setback to the Big Four firm which has been trying to clear a backlog of investigations into its work.
Mon Jan 20 2025 - 15:54

KPMG is being investigated by the UK’s accounting watchdog over its auditing of Ladbrokes owner Entain, delivering a fresh setback to the Big Four firm which has been trying to clear a backlog of investigations into its work.

The Financial Reporting Council (FRC) said on Monday it had launched a probe into KPMG’s audit of Entain’s 2022 accounts.

Entain, the FTSE 100 gambling group that also owns the Coral and Bwin brands, was ordered to pay a £615 million (€727 million) fine in 2023 as part of a deferred prosecution agreement following a years-long probe into allegations of bribery between 2011 and 2017 at its former Turkish unit.

That deal ended a corporate investigation by HM Revenue & Customs, but individual suspects were invited to enter into plea discussions with the Crown Prosecution Service last year.

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The new investigation announced on Monday is a blow to KPMG, which has been attempting to improve the quality of its audits as part of a push to repair its reputation and reduce the expense it has faced from fines and lawsuits over its work.

The accounting firm’s reputation had been damaged by a litany of scandals, including the 2018 collapse of its audit client Carillion, an outsourcing company heavily involved in delivering public services.

An investigation found multiple failings in KPMG’s work at Carillion while a separate tribunal found some of its auditors had misled regulators during inspections of their work.

KPMG’s UK chief executive Jon Holt has been attempting to improve the firm’s work, including by creating a specific team dedicated to overseeing its approach to banking audits, which had been heavily criticised by the FRC.

KPMG has been fined repeatedly in the UK for shortcomings in its auditing of companies such as Eddie Stobart Logistics, Revolution Bars, Rolls-Royce and BNY Mellon. It has been penalised by the FRC in 17 different cases since 2018 and paid far more in fines than its rivals.

The FRC said its conduct committee had decided to launch the probe into the Entain audit in November, but it did not give details about which aspects of KPMG’s work were being investigated.

The FRC has powers to levy fines on both the accounting firm and the lead partner involved in the audit. It can also bar individuals from practising and impose non-financial sanctions, such as ordering extra training. Any fine in this case would be paid to HM Treasury.

KPMG has audited Entain since 2018 and was paid £3.6mn for its work on the 2023 accounts. It said: “We will co-operate fully with the FRC to conclude this matter as quickly as possible.”

Entain, which is not under investigation by the FRC, declined to comment. - Copyright The Financial Times Limited 2025

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