Source: Financial Times

The UK accounting watchdog has dropped its investigation into KPMG over its auditing of Ladbrokes owner Entain without taking any enforcement action against the Big Four firm.

The Financial Reporting Council opened its investigation into KPMG’s audit of Entain’s 2022 accounts in November 2024 and announced the probe two months later.

The investigation came more than a year after Entain was ordered to pay a £615mn fine in 2023 as part of a deferred prosecution agreement following allegations of bribery at the former Turkish unit of the FTSE 100 gambling group that also owns the Coral and Bwin brands.

“Having reviewed the evidence obtained in the investigation, and having considered all relevant factors, the FRC’s executive counsel has decided not to bring enforcement action,” the regulator said on Thursday.

KPMG said: “We are pleased the investigation has concluded without sanction, and we remain committed to delivering sustainable audit quality.”

Last week, KPMG told staff it planned to cut 600 UK jobs, including about 440 assistant manager roles, in its audit unit.

The decision to close the investigation is a boost for KPMG, which has been seeking to improve the quality of its audits and repair its reputation after suffering a litany of scandals including the 2018 collapse of its client Carillion.

It is the second time this year that the FRC has dropped an investigation into a Big Four audit firm without taking action after it closed a probe into EY in January over its audit of a public-interest entity and a related group.

The FRC announcement follows last week’s unveiling of a softer approach to supervision after years of tougher enforcement. The regulator adopted a more aggressive stance after the collapse of outsourcer Carillion, which in 2017 announced more than £1bn of writedowns after KPMG gave an unqualified opinion on its accounts.

Carillion’s implosion, alongside other corporate failures, sent shockwaves through the audit sector and triggered a push to strengthen the regulator’s powers, with multiple independent reviews and a government white paper.

Momentum for sweeping reform has since waned as the government raises pressure on watchdogs to ease constraints on business.

Last week the FRC presented a “major evolution” to ease its oversight of UK audit firms, including fewer graded inspections for firms judged to be performing well and greater reliance on firms’ own internal quality controls.

KPMG cleared by UK watchdog over audit of Entain gambling group

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