FRC probes KPMG over Entain booking audit

The Financial Reporting Council (FRC) has announced a formal investigation into one of the largest accounting firms in the industry, KPMG. Known as one of the "big four" companies in the industry, KPMG has a reverential status for credibility, dependability and precision.

However, the regulator raised concerns over the audit the company carried out for one of the largest gambling companies, Entain, the agency said on Monday.

Entain external auditor named in new FRC probe

In the meantime, a KPMG spokesperson in the United Kingdom said that the company was prepared to assist in any way and as quickly as possible.

"We will cooperate fully with the FRC to conclude this matter as quickly as possible," the person said.

The FRC has said that the investigation and any subsequent enforcement will fall under the remit of the Audit Enforcement Procedure. The period targeted by the investigation is the report for the year ended in December 2022. KPMG is Entain’s external accounting editor.

This is not the first time KPMG has faced challenges, as the company has previously been questioned over its practices in auditing British builder Carillion. The company was eventually ordered to pay $26m over the audit which was dubbed "textbook failure" in the way it had audited its client.

It is not immediately clear what caused the latest investigation into KPMG with regard to Entain’s accounting. However, the company recently had to settle with the Crown Prosecution Service over alleged bribery cases linked to Entain’s former Turkish unit.

At the time, however, the company was not operating under its current brand name, but under GVC Holdings. Ultimately, the owner of Ladbrokes and Coral agreed to pay a $711m penalty to settle the case and put future attacks on its business aside as part of a deferred prosecution agreement

It took the HM Revenue and Customs office four years to investigate the case, beginning in 2019. The period of the alleged offenses was pegged between 2011 and 2017, and before the business rechristening to Entain.

Entain undergoes recent spell of executive exodus and restructuring

At the time, Entain’s then-chair Barry Gibson said that the matters investigated by authorities were part of the former management’s actions and not related to the company’s present operations.

Gibson said he would step down from the job by September 2024 and was replaced by the company’s interim CEO, with Isaac Gavins, a Scientific Games veteran, stepping in the driving seat on September 2, 2024. .

Entain also saw the departure of Jette Nygaard-Andersen who joined Entain in 2021, after the abrupt leave of Shay Segev, the first CEO to take over the rebranded company. Nygaard-Andersen left in December 2023.

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