KPMG Under Investigation Over Entain Audit In 2022

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The Financial Reporting Council (FRC), Britain’s accounting watchdog, has initiated a probe into KPMG’s audit of Entain’s 2022 financial statements. As one of the “Big Four” accounting firms, KPMG’s practices are under intense scrutiny, especially in light of recent high-profile audit failures.

The announcement of the investigation has reignited discussions about the effectiveness of external audits and the need for robust financial controls.

The Financial Reporting Council’s decision to investigate KPMG’s audit of Entain’s 2022 financial statements marks a significant development in the ongoing scrutiny of major accounting firms. This probe, falling under the FRC’s Audit Enforcement Procedure, will be conducted by the watchdog’s enforcement division, signalling the seriousness with which the regulator is approaching potential irregularities in financial reporting.

KPMG’s Role and Recent History

KPMG, as one of the world’s leading professional services firms, has been Entain’s external auditor for six consecutive years. This long-standing relationship has now come under the microscope, particularly in light of KPMG’s recent history of audit-related controversies. The firm has faced significant challenges in recent years, including:

Audit Methodology and Procedures

The FRC will likely scrutinize the methods and procedures employed by KPMG during the audit of Entain. This examination may include:

Compliance with Auditing Standards

A critical aspect of the investigation will be determining whether KPMG adhered to the relevant auditing standards and professional guidelines. This may involve:

Independence and Objectivity

Given KPMG’s long-standing relationship with Entain, the FRC is likely to closely examine the firm’s independence and objectivity. This could include: