Global Auditor KPMG Under Investigation In the UK Over Entain Audit

Article by : Erik Gibbs Jan 21, 2025

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The UK’s Financial Reporting Council (FRC) has launched an investigation into KPMG’s audit of Entain’s financial statements for the year ending December 2022. This probe, managed by the FRC’s enforcement division under the Audit Enforcement Procedure, aims to assess the quality and compliance of KPMG’s work with professional standards.

Entain, a prominent gambling company known for its Ladbrokes and Coral brands, has faced its share of scrutiny, adding weight to the investigation.

KPMG has confirmed its cooperation with the FRC, stating it aims to bring the matter to a resolution swiftly. This investigation comes amid broader challenges for KPMG, which has been embroiled in several high-profile controversies over its auditing practices in recent years. Notably, in 2023, the firm faced a record £21 million (US$26 million) fine for serious failures in its audit of Carillion, a construction company that collapsed in 2018.

Entain has also drawn attention from regulators. In 2023, the company entered a deferred prosecution agreement with the UK’s Crown Prosecution Service, agreeing to pay £585 million (US$716 million) in penalties for alleged bribery offenses tied to its former Turkish operations. This agreement followed a years-long investigation by HM Revenue and Customs, beginning in 2019, into Entain’s practices in the region.

The relationship between KPMG and Entain spans multiple years, with KPMG serving as Entain’s group external auditor since 2017. The audit under investigation marks KPMG’s sixth financial reporting review for the company. While neither KPMG nor Entain has been accused of wrongdoing directly linked to this specific audit, the inquiry adds to the challenges both entities face in maintaining trust and transparency.

KPMG’s recent struggles highlight broader concerns about auditing practices in the UK. The Carillion scandal, in particular, raised questions about the firm’s oversight and professional standards, prompting increased scrutiny of its operations. For KPMG, the FRC’s probe into its Entain audit represents another critical test of its ability to uphold the expectations of a global auditor.

Entain’s involvement adds a layer of complexity. As one of the UK’s largest gambling operators, the company operates in a highly regulated industry, where financial reporting and compliance are under constant scrutiny. The allegations of past misconduct in Turkey and the subsequent penalties underscore the importance of rigorous and transparent auditing practices for firms of its scale.