FRC considers KPMG investigation over Rolls Royce
The Financial Reporting Council (FRC) is considering an investigation into KPMG’s work as auditor of Rolls Royce
Last week the British engineering giant agreed to pay £671m in fines after it admitted bribery and corruption charges to authorities in the UK and US.
The Serious Fraud Office (SFO), following its largest ever investigation, found that Rolls Royce had paid bribes and used middlemen to secure contracts in several countries, including India and Thailand, over a period of more than 20 years.
Rolls Royce apologised “unreservedly” for the cases and said it would now implement a “zero tolerance” policy on business misconduct.
KPMG, which has audited Rolls Royce since 1990, could now be the subject of an investigation from the accountancy watchdog the FRC over its audit work at Rolls Royce.
A spokesperson for the FRC said, “We have been aware of the SFO investigation since 2013 and we will now consider if the outcome requires the FRC to investigate if the auditors and accountants at Rolls Royce did not fulfil their duties.
KPMG said it will co-operate with any investigation. A spokesperson for the firm said, “It is a matter for the FRC to consider whether the report and accounts prepared by the company comply with the relevant requirements and whether those responsible for preparation (and audit) thereof have fulfilled their obligations in that regard.”
The Big Four firm lost the lucrative audit contract to rival PwC in December last year. The appointment remains subject to approval by shareholders at the annual general meeting in 2018.
In September 2016 ICAEW member and chief financial officer of the Daily Mail & General Trust Stephen Daintith was made CFO at Rolls-Royce. His appointment was part of a shake-up at the firm following five profit warnings in two years and a 20% cut in senior management.
Raymond Doherty – Economia