FRC Starts Investigating KPMG with Regards to their Audits of Rolls-Royce
The Financial Reporting Council (FRC) has publicly announced that they have started investigation into KPMG’s audit of the Rolls-Royce but the decision of investigation with regards to KPMG’s audit of the Rolls-Royce Group was made after the group decided to settle a bribery and corruption case by agreeing to pay almost £500m to the Serious Fraud office (SFO) earlier this year.
The decision of investigating the audit of the financial statements of the engineering group was made by the FRC after the group decided to settle a bribery, false accounting and corruption case by deciding to go in to a Deferred Prosecution Agreement (DPA) with the SFO in January of this year.
As per the DPA, Rolls-Royce agreed to pay a UK settlement of £497.3m. Rolls-Royce also agreed to reimburse all the cost incurred by the SFO in relation to the case, the cost is estimated to be about £13m. The engineering group also went in to separate agreements with Brazil’s Ministério Público Federal and US Department of Justice which resulted in the group paying almost £671m in total to the investigating bodies in US, UK and Brazil so that to settle the allegations put on them with regards to corruption, false accounting and failing to prevent bribery.
FRC has already started investigating KPMG with regards to the audit they have conducted of the financial statements of Rolls-Royce Group from 2010 to 2013.
In response to FRC’s decision of investigating the audit of Rolls-Royce, KPMG released a statement as per which they consider that it is important for the regulators to act in the public interest and therefore if needed should also intervene in issues that lies within their scope and work. KPMG has ensured that they will fully co-operate with the FRC’s investigation of the audit of the Rolls-Royce’s financial statements. KPMG is very confident with regards to the quality of the audit work they have performed during the course of the Rolls-Royce audit which they have conducted in between 2010 and 2013.