KPMG Under Investigation by Financial Watchdog for Entain Audit Review

The Financial Reporting Council (FRC) has launched an investigation into KPMG’s audit of betting giant Entain, adding fresh scrutiny to the Big Four accountancy firm’s practices. The probe, initiated in November, focuses on the examination of Entain’s financial statements for the year ending 31 December 2022.

KPMG, which has served as Entain’s auditor since 2018, faces mounting pressure as this investigation follows a series of high-profile audit failures. The firm’s spokeswoman acknowledged the inquiry, stating their commitment to full cooperation with the FRC to expedite the resolution.

The investigation arrives at a challenging time for Entain, the FTSE 100 gambling powerhouse behind renowned brands such as Ladbrokes, Coral, and BetMGM. The company recently projected adjusted underlying earnings between £1.04 billion and £1.09 billion for the year’s end, targeting the upper range of expectations.

Regulatory challenges have plagued Entain in recent years. The company agreed to a substantial £585 million settlement with HM Revenue & Customs in 2023 regarding alleged bribery offences in its former Turkish operations. The settlement included an additional £20 million charitable contribution and £10 million to cover HMRC’s costs.

Market analysts, including Peel Hunt’s Ivor Jones, suggest potential share price volatility until more details emerge about the investigation’s scope. The gambling giant’s shares responded to the news with a 1.7 per cent decline, settling at 658½p.

The investigation marks the latest chapter in KPMG’s troubled history, following their record £21 million fine in October 2023 for what regulators described as “textbook” failures in the Carillion audit case. The outcome of this new probe could have significant implications for both KPMG’s reputation and the wider accounting sector’s regulatory landscape.