Regulator zeroes in on KPMG over M&C Saatchi audit
KPMG faces scrutiny from the audit regulator after an accounting scandal at M&C Saatchi saw the business overstate its profits £14m in irregularities dating back to 2014.
The Financial Reporting Council (FRC) has made initial inquiries to determine whether KPMG’s auditing met the required standards, the Financial Times first reported.
The inquiries are a formal step to determine whether to launch a full investigation.
KPMG’s chief risk officer John Bennett led the audit of M&C Saatchi from 2013 to 2017, then partner Adrian Wilcox took over in 2018.
After that KPMG resigned from the audit and PwC took over.
The FRC is already investigating KPMG for three separate audits relating to Carillion, Convivality and Rolls-Royce.
The accounting scandal at M&C Saatchi led City regulator the Financial Conduct Authority to open an investigation into the firm in early 2020, which saw M&C Saatchi shares implode.
Later in the year M&C Saatchi’s founders Jeremy Sinclair, David Kershaw and Bill Muirhead – known as the three amigos – who set up the company when they split from Saatchi & Saatchi in 1995, decided to hand over the reins in a bid to draw a line under the saga.
KPMG declined to comment. The FRC has been contacted for comment.